Market Action

USDX: 93.75

Dollar Index dipped down after the US CPI data release but bounced back off daily lows to settle where it started the day.

USDX is now likely to hold these level and trade in a narrow trading range, around 94.

Markets are now fully pricing a December rate hike, so a snap higher can be discounted as it will no surprise next month, after the inflation data came in as expected overnight.

USD JPY: 112.85

Dollar-Yen saw wild volatility yesterday, taking a sharp move lower to see 112.50 for the first time in a while, then it popped back mildly higher after the US data release.

The risk-off theme dominated the early London session, causing the pulldown in USDJPY, also US Equities dropped to a 3-week low, dragging risk sentiment along too.

USDJPY is likely to make a run lower still but needs to break key resistance at 112.50 firstly, before heading towards 112.

EUR USD: 1.1785

Euro came alive and found support fast, over the past two days.
The Euro-USD traded to a high of 1.1860 before turning back under the 1.1800 to close off the New York dealing session.

I can really see a snap higher and run up above 1.1850 from here as the USD sell down may not be done yet.

I am watching the Bund yields closely for the possible spark to fire up this EURUSD pair, and the sharp moves yesterday indicate just how quickly the EUR can run up towards 119 or 120 with a US Tax Plan disappointment very possible.

The Fed Funds Futures are now pricing the US Rate hike around 100% for December, so we are set for a volatile few weeks ahead.

Look for the upside momentum to resume from this level.

GBP USD: 1.3175

Sterling came under pressure very sharply on the Monday morning open of trade after the weekend reports out of London regarding the PM May’s lack of support, but has completely filled that gap in a grind higher for the past two trading days.

The drift higher seems like it will get back to 1.32 today ahead of the UK data tonight as the US data was on par.

AUD USD: 0.7590

The Aussie was absolutely crunched lower after the wage data miss yesterday in the Asian session.

Today we have the Aussie headline jobs data, which can either way, but I favour the downside trend to be in play, towards 7530.

The China Industrial Production plus Retail Sales data were a very slight miss, but still solid, but AUDUSD was hit hard amid risk-off moves the past two trading days, plus the slide lower in Commodities, notably Copper.

NZD USD: 0.6870

The NZDUSD is under pressure, then reversed and got back to the 69c level ion London dealing.

More likely in the coming month ahead is a stock market sell-off spiralling risk off and the Kiwi moving towards 6750, but in the short term it seems happy drifting around the 6850 price support area.

It is more fun to play AUDNZD rather than NZDUSD at the moment, as the intra-day swings can provide some great trading opportunities.

USD CAD: 1.2770

Dollar-CAD has really been quiet compared to other major FX pairs, but it did get an uptick overnight as the Gold reversal hurt the CAD.

The USD wants to get back to 1.3000 but it’s a long way from that level, battling to break through the 1.2800 handle this week.

Oil was steady overnight, lifting back from $55 to $55.50, but Gold whipsawed and all of the commodity currencies were Offered yesterday.

VIX: 13.13

VIX is gaining ground, slowly but surely, finally lifting above 13 overnight, as US Equities sold down to a 3-week low.

This could be the beginning of a serious & significant correction in US Equities, and we had a risk-off theme overnight lifting VIX.

The US Tax Reform in its current form, it very unlikely to provide a result for Team-Trump, so the potential for US Stocks to give back some of this year’s gains is very high.

Expect the VIX to trade higher looking towards 15 over the next 5 weeks.

GOLD: $1,278

Gold lifted back towards $1,290 with the risk-off tone being dominant the past 2 trading days.

The extended timeline on the US Tax Reform will add a lot of buyers into Gold – I certainly favour long positioning in GOLD looking for $1,300, over the next 3 weeks.

My Weekly Outlook video for easyMarkets called GOLD (long) as a key trade idea for this week ahead, be patient with this one, as the bullish signs are there, and as Stocks show signs of cracking lower, Gold should fire up.

OIL (WTI): $55.50

Oil has seen a great deal of upward momentum shift strong Bids higher the past week or so but the production projections into next year has turned that momentum on its head.

The sharp $2 reversal back to $55 seems done, as the uptick resumed in Wednesday trade on the back of US Crude Inventories data.

Price action suggests that we may consolidate around the $55 level for now, still looking to grind higher to end this year towards $60.

BITCOIN (BTC): $7,250

Bitcoin traded back up VERY sharply after the capitulation over the weekend and to start this week.

Crypto investors have raced into the bargain levels, and we are now aiming for $7,500 or even $8,000 to end this week…

I remain very bullish towards $8,000 price target after the traders have shrugged off the pullback coming on the back of the cancelled Bitcoin fork last week.

Macro Themes in Play

• USD Outlook remains unchanged, looking to December rate hike
• Risk off tone still looming as US Equities start showing signs of pullback
• EURO looks likely to run above 1.1800 again.