Daily Trader Talk – Tuesday 18th July.
What Happened on Monday > Top 3?
> FX Majors consolidate. AUD, NZD, CAD & GBP all slightly weaker against USD.
> Gold pushes higher as markets reprice USD outlook.
> Euro still looks very strong, pushing higher to 1.1475
Outlook
+ GBP in focus today as UK CPI set for release, also Aussie RBA minutes.
+ NZD Crunched this morning after soft Inflation data.
+ Markets looking ahead to key Central Banks: BOJ & ECB on Thursday
Data & Event Risk Today?
- (AUD) RBA Policy Meeting minutes – 11.30am Sydney.
- (GBP++) UK CPI – 6.30pm Sydney.
USDX: 94.90
The Dollar Index pretty much unchanged and still looking soft, trading below 95.
The doubts are creeping in regarding the Fed outlook on Rate Hike path but as always it is data dependent.
USDJPY: 112.60
Dollar-Yen had a wobbly day yesterday as Japan was off for a Bank Holiday.
USDJPY traded lower to 112.30 before a bounce back up to 112.80 then settled down on the open today.
Bank Of Japan is crucial which is happening this Thursday in the Asian session, so leading into that the likely range trading will continue to ping pong between 112.20/112.80.
EURUSD: 1.1475
The Euro showed its strength yesterday grinding upwards to highs around 1.1480.
EURUSD still capped under 1.1500 leading into this week’s ECB announcement happening Thursday in the London session.
A breakout higher will occur if any hints on tapering the Bond Buying program are evident in the language from ECB press conference.
GBPUSD: 1.3055
The Sterling had a day of consolidation lower against the Greenback as the Brexit negotiations continued for the UK.
UK CPI will be in focus tonight on the London session open as the Rate Hike theories continue to build a solid case for the GBP.
I favour the Upside for Sterling against the USD looking for a breakout above 1.3100 to firmly kick in tonight on the back of CPI data release.
AUDUSD: 0.7790
The Aussie had an interesting Monday as solid Chinese data hit the wires for GDP & Industrial production, the Aussie decided to pull back anyway.
AUDUSD came of recent highs of 7830, Offered back to 7790.
AUD wasn’t helped by a soft Kiwi trading range on Monday but yesterday’s moves lower certainly display the idea that the markets wanted to take some profit for AUDUSD.
NZDUSD: 0.7280
The NZD was our Trade of The Day yesterday and got crunched lower this morning after the miss on Inflation data this morning.
NZDUSD came back from highs of 7370 to 7260 lows today in a corrective move knee-jerking lower immediately following the Inflation data print today.
More pain in store for the Kiwi.
USDCAD: 1.2640
USDCAD finally saw some profit taking as the Oil price slid back, being enough excuse to sell CAD.
USDCAD bounced pretty swiftly from lows of 1.2620 to come back to 1.2700 in what looks to be an obvious profit taking manoeuvre. The oil price slide didn’t help but USDCAD should consolidate under 1.2750 from here until we get the Canadian CPI on Friday.
VIX: 9.82
Volatility Index is maintaining its low sub 10 levels, as it has for a few weeks now.
This week will add a potential for that to change as the event risk heats up with more US data, BOJ, ECB and inflation data for UK, CAD & NZ.
Volatility is still extremely low, which can’t last.
GOLD: $1,233
Gold was a great BUY yesterday seeing firm Bids higher to 1235 as markets are doubting the Fed’s next move on US interest rates.
Not much else to say, more upside to come as the repricing of the USD continues. I can see $1240/$1250 over the coming weeks!
Oil (WTI): $46.33
Oil has a soft start to the trading week, grinding lower by 50cents but still holding around the 46/46.50 range.
Near term targets are hard to pick for Oil in very volatile recent trading bands, but I favour the upside.
Macro Themes in Play
- NZD Crunched lower on Soft CPI, but consolidation ion most majors against USD continues.
• EUR looking strong ahead of ECB super Thursday. Will EURUSD breakout above 1.1500?
| Russell Sandiford / Dealer | ||
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