Market Action

USDX: 94.75

Dollar Index has traded in a narrow range overnight, hovering around the 94.75 level.

USDX may trade in more restrained ranges this week ahead of next week’s US Inflation data release, however, this developing news around the Tax Plan possible delay can drag USDX lower in the short-term.

It does look heavy and may trade down to 94.50 before finding support.

USD JPY: 113.85

Dollar-Yen has been a basket case this week, selling down yesterday before a sharp reversal to close out the NY trading session around 113.75.

USDJPY has often come back fiercely led by the Bond markets after a nasty slingshot move like we saw the past two days, but it needs a key breakdown to run much lower from here.

That can happen and BOJ commentary this week plus the soft US Tax story is likely enough of a catalyst to see USDJPY Long traders unwind positions, seeing a run towards 112.50

We needed a stocks selloff to spur on the USDJPY selling, as it did dip down to 113.30 in overnight dealing sessions, but then bounced back.

EUR USD: 1.1600

Euro traded sideways on Wednesday, across all trading sessions.

The DAX soft trade pattern yesterday did not follow on to the EURUSD level so it was a very quiet range for those looking for volatility in Euro against the USD.

I can’t see a plus 1.17 move but can see a lift higher to finish this trading week, perhaps more likely is 1.1650-1.1680 but first we need a spark.

I am watching the Bund yields closely for the possible spark to fire up this EURUSD pair.

GBP USD: 1.3110

Sterling was Offered lower on Wednesday in a significant reversal of recent form.

The support kicked in at the 1.3100 level and GBPUSD potentially formed a base here, although it does seem like a directionless pair once again.

The recovery sees GBP back around key level but I am doubtful that it can achieve the 1.3200 level, so look for a gentle and settled move to rest around 1.3150 leading into the UK & US data on Friday.

The range should be limited to 1.3050-1.3150 this last part of the trading week.

AUD USD: 0.7680

The Aussie sustained a nice drift higher all of Wednesday, lifting back towards the 77c price area.

The RBA held the cash rate steady, and initially AUSDUSD lifted to 7700 but then it turned soft, in drifting trade action on Tuesday, so we are looking ahead to today’s China Inflation data for a potential move back above 77c.

The RBA commentary was much of the same but the Bulls were left looking for more, as RBA highlighted increased property debt risks for Australia. That makes the next moves for the AUD down to China data or the USD sentiment / (risk sentiment).

I still favour a move higher back to 7730 but we need a stronger China number today to spur some Bidders.

NZD USD: 0.6955

The NZDUSD got a solid lift back to 6970 very sharply despite the RBNZ holding on interest rates this morning.

What the RBNZ did change is the overnight cash rate outlook which was the hawkish reason behind the jump higher on the Asian open today.

The dairy numbers overnight were not supportive, yesterday, so the Kiwi may come under pressure with 70c acting as a strong resistance hurdle.

I think it can recapture the 70c handle but then likely to turn back (lower) from there, as we head into next week’s crucial US Inflation data (Thursday).

USD CAD: 1.2730

Dollar-CAD lifted to highs on Monday, around the 1.2800 handle, but has since been grinding lower.

Over the mid-term it still looks a great trade to consolidate higher from here, heading closer towards the US rate hike next month, seeing 1.3000 as an obvious ceiling, but the 1.2850 market needs to be punched through firstly.

In the short-term though, the Oil price rally will help support the CAD, and hold USDCAD around 1.2750-1.2800.

I cannot see an end in sight for the Oil rally (towards $60) so expect USDCAD to be a little restrained in the above range.

VIX: 9.78

US Stocks are holding up firmly this week ahead of the hugely important Trump visit to Asia, and the DOW was at a record high again yesterday.

Stocks maintained strong levels overnight, boosted by Tech stocks, holding VIX sub-10.

I wonder if some of the Trade-War commentaries from Donald Trump’s visit to China today can spur a change of theme in US Equities and jolt the VIX?

GOLD: $1,281

Gold saw a solid volatility yesterday moving higher to 1286 then back around 1280 again.

Price action still seems fair value to me, as we are in a familiar range for gold, ping-ponging inside the $1,260-$1,285 range.

Expect a volatile fortnight ahead for GOLD as Donald Trump visits Japan, China & South Korea, where the North Korean issue may rare up once again.

Traders are looking ahead to the US CPI next Thursday, but expect the US to raise rates in December regardless, holding GOLD back to around 1250 to close off this year in my view potentially.

In the very short-term we may see bids back to 1285 as the US Tax Reform story unfolds, and if it is in fact delayed, Gold will lift higher.

OIL (WTI): $56.90

Oil has seen a great deal of upward momentum shift strong Bids higher the past week or so.
Last night we saw a price spike to 57.80 before a very nasty reversal.

The continuing story around OPEC planned production cuts, particularly from Russia & Nigeria, was a big driver for Oil price rally.

The pushback occurred after Crude Oil Inventories show US production is full steam ahead, dragging oil (WTI) prices back.

Price action suggests that higher highs will maintain, towards $60.

BITCOIN (BTC): $7,435

Bitcoin screamed higher to see record highs around $7,900 yesterday as the news hit the wires around the proposed Bitcoin Fork being suspended, lifted huge buying power in BTC.

The momentum turned to profit taking very quickly, as the reversal was also fierce.

CME Futures & ETF for Bitcoin are both also coming soon so my call of $7,500 by year-end is very much in play, after getting over the hurdle at $7000 last week, even with last night’s shake outs.

Today, we will likely see Buyers step in again at $7,500 and push through $8,000, now that the Fork is suspended/cancelled.

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Macro Themes in Play

• Kiwi Dollar lifts as RBNZ get in on the Inflation Outlook hawkish manoeuvring
• US Tax Reform is a huge story, any delays will hurt USD
• Bitcoin rallied fiercely to $7900 then faced a sharp pullback, $7,450.