Market Action

USDX: 92.95

Dollar Index has whipsawed both ways this week but came off lows late in the US session to lift towards 93.

The US Tax Reform story seems to be gaining ground as Senator John McCain supports the bill.

This can still fall over at the next stage, but it does look far more likely now and can possibly lift USDX back towards 95.

USD JPY: 112.65

USDJPY was solid on the back of the headlines surrounding tax reform progress but I feel that it can move much higher through 113.50 and possibly on to 115 if t fully passes.

The bullish momentum seen in the USD moves overnight can be attributed to the lack of clear opposition to the US Tax Reform plan, which can move to a huge bull run higher in USDJPY.

Let’s see how the next few trading days play out, but expect markets to re-price assets such as USDJPY higher accordingly.

EUR USD: 1.1895

Euro slid back under the 1.19 handle and I anticipate more downside to come.

There is the possibility of the US Tax Reform progress next week spurring a huge spike in EURUSD breaking down under 1.18 as markets catch up on the USD sentiment driven by this Tax Reform change.

I expect a breakout later this week or next, however, in the meantime, a likely holding pattern around 1.1850 -1.1880.

GBP USD: 1.3530

Sterling is supported by Brexit progress and is the major FX pair leading the pack currently.

I have been calling 1.3600 for GBP-USD for 2 weeks now, and maintain that target.

Essentially the UK have agreed to the huge Euro based divorce settlement figure, but we need confirmation from the EU side to see a run up towards 1.36 or even higher.

GBPUSD for mine is still the strong trade of this week ahead and also note GBPAUD has my 1.83 targets in sight (longer range target) after lifting 200 pips past two trading days.

That’s an interesting way to play the Sterling strength without the USD.

AUD USD: 0.7560

The Aussie jumped back towards 7550 on the back of broad based USD strength overnight.

The risk-off potential of the US further pressuring China to cut off the Oil supply to North Korea will hurt the risk appetite and the AUDUSD, so look for another turn lower in the coming week.

Realistically though, that story will take may backseat to the US Tax Reform likely pushing AUSSIE lower anyway.

Look for a move towards 7450 possibly unless the tax plan completely flips and the AUDUSD turns higher into a relief rally.

NZD USD: 0.6825

The NZDUSD took a big tumble lower as the theme was to buy dollars against the commodity currencies yesterday.

The grind higher in the Kiwi was short lived and now we may break down under 68.

The Kiwi range should maintain 67 – 69c to close off this year.

USD CAD: 1.2895

Dollar-CAD got another uptick overnight as the CAD was soft and the dollar carried on higher.

Slight pullback in Oil did not support the CAD, but certainly helped USDCAD get towards the 1.2900 level.

It should only be a matter of time before we are running up towards 1.300 unless the tax plan totally flops.

Strong bullish bias now in play, as more clarity is now in the market re OPEC Oil production cuts too.

VIX: 11.28

US Stocks were lifted through the 24,000-benchmark level on the Dow Jones overnight as the news around the US Tax Plan was spurring more buying power.

The VIX lifted off the lows to get a run above 11 anyway as the fear index starts to move out of the very narrow trading range.

This is set for a break very soon, so look for much bigger trading ranges in the coming fortnight.

GOLD: $1,276

Gold tumbled back sharply from 1296 to 1270 amid a USD buying spree in the US Session yesterday.

No surprise that the cause is the optimism around the USD outlook had crushed GOLD.

The trading range for Gold has done a reset lower and may break down below 1260 if more hints of lack of opposition to the proposed US Tax Reform flow through our newswires.

This can go either way, so be nimble, but I prefer the upside on a possible USD disappointment out of the US Tax Reform story, which I just cannot see passing in its current form, but anything is possible.

OIL (WTI): $57.35

Oil is holding just under $57.50 ahead of the OPEC plans for 2018 production cuts.

I maintain bullish bias for WTI looking for a breakout to $60 but may not see that this week.

Price action suggests that we may consolidate around the $58 level for now, still looking to spike higher to end this year towards $60 or even higher on the OPEC headlines.

BITCOIN (BTC): $10,100

Bitcoin has seen a very volatile price action over the past two days after hitting the record $11,400.

The CME Futures coming hopefully next month is complimented by the NASDAQ also announcing that they will offer Bitcoin Futures products in the first half of 2018 – supporting this furious rally.

The Futures market starting not only adds legitimacy, but will see the money flowing into Bitcoin shift from Retail speculation to the institutional side.

Crypto investors saw profit taking sharply move Bitcoin back off highs this morning (back down) to 9150 before bargain buyers stepped in again, resuming the + $10k price level.

Look for another run up towards $12,000 over the weekend as bargain hunters step in (in my view) around $10,000.

Macro Themes in Play

• US Tax Reform Story gathers pace as Senator John McCain supports tax plan
• GBP Lifts quickly as Brexit headlines roll through, GBPJPY up 500 Pips
• Gold back off highs amid USD Bids, Bitcoin aiming north again