Midweek Market Wrap

USDX: 94.80

Dollar Index turned back from 95 which may be the corrective switch lower that the Dollar-bears were looking for.

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 before finding support.

USD JPY: 113.70

Dollar-Yen has been a basket case this week, Bid higher on Monday in a fake breakout, then sharply lower seeing 1113.65 in early Asian dealing today, on the Tokyo open.

The BOJ tone today on the newswires was the catalyst for a lower yesterday, but today we are seeing the US Tax Reform story in the news so look for lower levels in USDJPY.

USDJPY has often come back fiercely led by the Bond markets after a nasty slingshot move like we saw yesterday, 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.

EUR USD: 1.1600

Euro made a move lower to 1.1555 in the New York FX session but has quickly recovered the 1.16 handle in a sustained reversal.

The likelihood of EURUSD lifting towards 1.1650-1.1680 price target is quite high from my analysis, as we get a decoupling of the USD bulls and potential jolt lower in the USDJPY.

The reason or cause for this move can be attributed to the Bund yield differentials catching up with EURUSD.

I can’t see a plus 1.17 move but can see a lift higher to finish this trading week.

GBP USD: 1.3170

Sterling held on to gains yesterday after last week’s price capitulation lower was reversed.

This was a common USD softness story playing out as the GBPUSD was far too oversold last week.

The recovery sees GBP back around key level but I am doubtful that it can achieve the 1.3250 level, so look for a gentle and settled move to rest around 1.3150 leading to the UK & US data on Friday.

Bids higher should remain capped under 1.3200.

AUD USD: 0.7655

The Aussie had a rough day yesterday, moving to 7630 before settling.

The RBA held the cash rate steady, and initially, AUSDUSD lifted to 7700 but then it turned soft.

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.

I still favour a move higher back to 7730 but it may also just drift around 7650, sadly.

NZD USD: 0.6910

The NZDUSD got a solid lift back to 6950 but then turned soft in the London session yesterday, as sellers won the battle for Kiwi.

The dairy numbers overnight were not supportive, and we now see NZDUSD sitting just barely above the 69 handle.

Tough to pick in the short term, but for year-end, more pain and lower lows are likely.

USD CAD: 1.2765

Dollar-CAD lifted towards 1.2800 as I called yesterday but since has softened a little in these undecided USD moves.

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.

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.

VIX: 9.89

US Stocks are holding up firmly this week ahead of the hugely important Trump visit to Asia, but there are signs that we are about to see some sell-downs.

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

Look for a breakdown in stocks before year-end, possible a large correction in my view, particularly as profi-taking may kick in.

GOLD: $1,277

Gold saw a solid volatility yesterday moving $8 from 1281 back around 1274.

Price action still seems fair value to me, as we are in a familiar range for gold, ping-ponging inside the $1,260-$1,280 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): $57.08

Oil has seen a great deal of upward momentum shift strong Bids higher the past week or so.

Overnight it got over the $57 marker then saw profit taking a little, as Nigeria announced that the will comply with ongoing OPEC planned production cuts, hence Oil lifted to 57.30 as I have been calling.

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

There was Bullish price action to close off last week, as Oil takes on new territory with the Saudi Arabia chess moves going on, and I feel that this is all about the proposed Saudi Aramco listing/Proposed IPO for next year.

BITCOIN (BTC): $7,105

Bitcoin has been volatile this week, but what else do we expect?
It pulled down to sub $7000 yesterday in what I feel is just the start of a significant pullback.

The momentum has switched to be strongly bullish again but be careful because the upcoming Bitcoin fork is very likely to cause a jolt lower.

Watch for a possible jolt (lower) towards $6,000 in the coming week ahead.

ETF for Bitcoin are 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.

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Macro Themes in Play

• Oil holds gains and looks like moving higher, Gold Volatile
• US Tax Reform is a huge story, any delays will hurt USD
• Euro traders watching Bund yields closely as Euro regains the 1.1600 handle