FX Markets Surging – Trader Talk

Daily Trader Talk – Friday 30^th June.

What Happened on Thursday > Top 3?

>Euro surged to a fresh 12-Month high against the USD (EURUSD)

>Pound takes out 1.3000 (GBPUSD)

>Volatility jumps and the FX markets fire up – US Equities take a Hit.

Outlook

+ Yen did its own thing on Thursday’s trade

+ Bullish Bias to continue for EURO

+ USD Index crunched as FOMC Member Bullard adds to USD Selloff

Data & Event Risk Today?:

• (AUD) China Manufacturing PMI – 11am Sydney.
• (EUR) German Unemployment Claims – 5.55pm Sydney.
• (GBP) Current Account data – 6.30pm Sydney.
• (CAD) Canadian GDP – 10.30pm Sydney

USDX: 95.30

The Dollar Index traded down to a 9-month low as markets start to doubt the Feds ability to consider rate hikes earlier than December.

Despite GDP data being solid for the US the overriding Macro themes are still leaning towards a Sell the dollar tone.

USDJPY: 112.10

Dollar-Yen took a run up to 113 yesterday as I called, to highs of 112.91.

The Yen did it’s own thing overnight, in the US session Yen traded higher against every pair and in particular, USDJPY did a nasty turn back by one big figure, from 112.91 to lows of 111.80.

This market wants to sell Dollars but the yen is soft generally, so this isn’t the easiest pair at the moment. Look for a possible move under 112 in the Asian session trade today.

EURUSD: 1.1440

The Euro surged to a fresh yearly high and has held that level at 1.1440.

This trade is a runaway trade with such strong macro reasons to be short dollars and long euros at the moment.

The markets have done a reset and the US is lagging on expectations of rate hikes, but the big story of this week from the central banker’s speeches has been the ECB signalling a change of policy.

We should see 1.15 or higher.

GBPUSD: 1.3000

Sterling finally broke to the 1.300 handle on the open of London dealing session yesterday.

GBPUSD will likely be the trade of July as we see positive headlines start to possible trickle out of continuing Brexit negotiations.

US FOMC Member Bullard (non-voting) commented that “The current level of Fed rates is appropriate and signalled the recent inflation data surprised to the downside”.

I have been telling all of our clients that key US Data that misses expectations will be enough for the Fed to use their “Data Dependent” disclaimer and that spells more pain for USD, which GBPUSD will benefit greatly from.

AUDUSD: 0.7685

AUD had a stellar continuation day across all three trading sessions yesterday fuelled by risk on themes carrying on from Wednesday.

Iron ore is up 14% for the week so far, surging to 5-week highs helping the AUDUSD find its way towards the 7700 level.

Must stay with this momentum at the moment. Going against the trend is not usually a prudent strategy when markets do a reset like this week has played out.

NZDUSD: 0.7295

NZDUSD had a very restrained trading range yesterday, essentially fizzling out on its rally to 7300.

The recent highs around 7350 remain tops for now.

Next week is Non-farm payroll data week, plus FOMC meeting minutes so the NZDUSD will see interesting trading ranges on the back of that I feel.

USDCAD: 1.2995

USDCAD has proven to be one of the best trades of this week by simply playing on the clear Divergence of Strong CAD outlook versus USD losing its lustre.

This is also an Oil recovery story trade so it has been a wonderful way to play the Oil price recovery coupled with BOC commentary this week.

Look for moves even lower towards the 1.2800 handle.

VIX: 11.44

Volatility Index jumped up sharply and much bigger trading ranges flowed on from that.

More to come!

GOLD: $1,245.50

Gold had a soft day yesterday because the risk on trade was in fashion.

We saw lows of 1240 for Gold and then a fast move back to the 1245 level. Profit taking may likely drive the price back towards the $1,250 price area.

Oil (WTI) : $44.96

Oil price continued the rebound yesterday after Wednesdays Oil Inventories data and risk recovery.

Highs of 45.45 didn’t last and Oil settles back where it opened.

Macro Themes in Play

+EUR Bullish momentum very strong

+GBP Bid much higher towards 1.3000 as Brexit sees light and BOE Carney Hawkish U-turn.

+AUD moves towards 7700 as Iron Ore is Bid to a 5-week high.