Market Action

USDX: 93.85

Dollar Index lifted higher amid solid payroll data for US on Friday evening.

The headline US Payrolls data (on Friday) is likely to be an excuse for the Dollar buyers to step, even though this week the very well telegraphed/priced in rate hike.

Expect more Dollar buying to see a push for USDX towards 94.50.

USD JPY: 113.65

USDJPY was a solid mover last week as I was calling from Monday last, amid USD Bids higher.

US 10-year treasury yields remain around 2.38%, flat from the close on Friday after the monthly payroll data was digested by Traders.

I think the USDJPY pair can find its way back above 113.80/114 this week when we get the CPI release in the US session on Wednesday, just before the Rate Hike.

I have a revised (higher) near-term target of 114.50.

EUR USD: 1.1775

Euro slid lower all last week, as I called, in the aftermath of the US payroll release and lingering Brexit negotiations.

The low was found around 1.1730 before a small uptick to start this trading week.

Euro may see lower lows towards 1.1700 if the USD strength plays out the way I am seeing it currently.

I am maintaining my outlook towards 1.1680-1.1700 range for EURUSD in the near-term seeing the potential for Offers down towards 1.1700 midweek as the US reports their Monthly CPI figures ahead of the likely Interest Rate Increase.

GBP USD: 1.3400

Sterling had a strange week last week, firstly Bid up to just above 1.35, before the USD strength brought it back to Earth.

Watch for the GBPUSD volatility this week ahead particularly around the inflation data release.

I maintain my target of 1.3600 for GBPUSD particularly if we get agreement on the divorce from EU payment from the UK, but that lingering negotiation did hurt the Sterling late last week, as markets were expecting more.

AUD USD: 0.7515

The looks very heavy around the 75c level amid a fierce slide lower from multi-month highs recently.

The downslide has firmly continued, with only a mild bounce in sight for AUD USD and AUD cross FX pairs.

I favour the downside on AUDUSD to end this week around 7450 as the US move on rates this Wednesday in the US dealing session, helping the Aussie lower as the Divergence plays out.

Also, don’t underestimate the negative SWAP spread on the 2-year treasuries to drag AUDUSD towards 7450 if we see a stellar NFP number for the US on Friday, more likely though is 75c.

I think 0.7450 looks very likely in the coming weeks as the divergence is in full swing.

NZD USD: 0.6855

The NZDUSD is virtually unchanged around 6860 after a minor spike higher when the US payrolls data showed a small miss of expectation of the Wage Growth metric.

The NZDUSD back around the familiar price range and seems like the USD is back in the driver’s seat for direction from here to close off this year around 6800 or 6750.

USD CAD: 1.2855

Dollar-CAD lifted off the canvas last week, as I mentioned from that key 1.2660 level, seeing a lot of upside momentum to bounce sharply back up to 1.2850.

The Bank OF Canada held interest rates last week but also noted some Cautions tone, hurting the CAD sentiment – hence USDCAD shot up above 1.2800 once again.

We may find a base here around 1.2850 for a move towards 1.3000 this week on the back of USD strength, very likely.

The door is open for more Buying power to step in this week on USDCAD from my experience with this pair.

VIX: 9.58

US Stocks holding up very well this year, seeing higher-highs printed on the charts.

The year-end volatility potential is always high, but Friday saw a 4% drop in VIX/ Volatility as the fear index slides under 10 again.

For too long this year, Stocks have seen unbelievable sustained upward momentum, so it can flip back quickly too, but needs a solid catalyst around US inflation data miss for example, or political instability relating to Team-Trump, otherwise, we are destined to remain around 9.5 – 11.

GOLD: $1,248

Gold did see a minor uptick on the Wage Growth Data miss on Friday, but that was short-lived as the Unemployment rate held steady, Gold was Capped under $1250.

Also, the New Jobs added data for the US was supportive of a strong USD and softer Gold price, so we will remain around 1248 until midweek, this week.

The USD is still looking strong, now that the US Tax Reform has cleared the first BIG hurdle in the Senate, so I will not be shocked if the downside resumes for GOLD with my renewed targets around the $1,255 marker.

When US rate hikes are announced we may see a muted move because it is fully priced in most likely

OIL (WTI): $57.10

Oil holding around the $57 price point after a whipsawing week last week, seeing a high on Friday around 57.75.

The US data surrounding Oil Production is weighing on the rally that looked like $60, now it has settled back firmly around $57.

Price action suggests that we may consolidate around the $58 level but it can be an unpredictable beast, so be nimble.

BITCOIN (BTC): $15,600

Bitcoin had a HUGE run up last week, seeing a record high around $17,00 before the sharp Reversal that I have been calling occurred.

The CME Futures start next Monday, but CBOE kicked off this morning, seeing 192 Futures contracts traded in the first 15 minutes, according to my Reuters Terminal.

For that reason, I can see a nudge towards $16,000 and then possible pullback once again.

The weekend trading showed wild volatility, seeing lows around $13,200 before moving back to $15,000 so this is not for the faint-hearted!

Crypto investors are likely to keep the buying pressure, possibly to $16k level, before another possible sharp reversal.

Macro Themes in Play

• US data in focus this week with US CPI & Interest Rate Hike
• GBP volatile, back to 1.3400, amid ongoing Brexit talks
• USD Bid across the board, capping Gold under $1250 and lifting USDCAD & USDJPY