Monday Market Action

USDX: 92.80

Dollar Index fell in thin trade on Friday with the US bank holiday, to a 2-month low.

The main risk theme here is the progress in the US Tax Reform, which can certainly go either way.

The 93 level broke down but USDX looks like crawling its way back to restart this new trading week, so expect a small blip back above the 93 handle.

USD JPY: 111.40

USDJPY traded mildly higher last Friday in a thin US session but turned back from 111.70 very quickly on the Asian market open today.

I think we will see a very quiet start to the week for USDJPY as the US comes back from their holiday, but also because it is not likely that the Tax Reform progress is due out until later in the week.

For that reason, expect a consolidative move around the 111.50 price point today, then the USD direction will likely track the US 10-year yields.

The focus shifts to the US Debt Ceiling and Tax Reform this week so a move towards 110.80 is quite possible with the door wide open for a USD disappointment.

EUR USD: 1.1920

Euro got a strong Bid higher on Friday, moving through the 1.1900 orders, making a high around 1.1940 before a mild retreat.

There is the possibility of the US Tax Reform progress next week spurring a huge spike in EURUSD either way, meaning 1.17 or 1.20+.

I expect a breakout this week.

Anything positive from that story will see a bounce back above 1.1950 very quickly, even though I favour the downside to play out back under 1.18.

GBP USD: 1.3320

Sterling traded quite bullish on Friday amid light liquidity in the US dealing session.

The softer tone in the USD helped GBPUSD to lift to 1.3355 before a mild retreat and this was my trade of the week last week, Long towards 1.3400 or higher.

The GBPUSD is crawling higher but still needs a big positive Brexit headline to jolt above 1.34 and on towards 1.35, which is how I can see this coming fortnight playing out.

AUD USD: 0.7605

The Aussie didn’t’ follow the Copper rally late last week but was still in a recovery mood last week.

The upside on AUDUSD was capped at 7630 and we saw a soft open today to start the new week, Offered back to 7600.

The RBA speech on Tuesday did refer to the next move for the RBA to be an increase of rates, but the Aussie is void of any key data this week, which puts the USD back in the driver’s seat again for this pair.

The Aussie 2-year SWAP spread has turned negative so expect the selling to resume for AUDUSD, so expect the Aussie to trade back to 7550 without too much effort.

NZD USD: 0.6865

The NZDUSD 4-hourly chart is almost a picture-perfect repeat of the AUDUSD chart.

I can see the Kiwi upside being capped firmly under 69c, so expect some possible selling pressure to come into play, amid a wait and see approach to the US Tax Reform progress.

The Kiwi range should remain 67-69c to close off this year even with the US Tax Reform story looming large over the Kiwi-Dollar sentiment.

USD CAD: 1.2715

Dollar-CAD was whipsawing last week, up & down like a yo-yo.
There are huge risks this week in store for CAD as the Friday data is firstly met with big moves likely in the OIL price.

OPEC on Thursday can sway the OIL momentum wildly, which drags around the CAD sentiment too.

Quite a volatile pair to trade lately, so now that we have done a price re-set to 1.27 levels, I expect a breakdown under 1.27 as Oil should get an Uptick in my opinion (to above $60 WTI).

VIX: 9.67

VIX basically trading in a holding pattern, under 10 through the US Thanksgiving Day bank holiday.

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, but the rally grinds ahead in the mean-time.

Expect the VIX to trade higher as it always spikes (sharply) when the levels are too low for too long.
I still anticipate a lift to 14 or higher this year.

GOLD: $1,290

Gold started last week to look very bullish, then took a turn south sharply to close back under 1290.

The trading range for Gold has tightened up around the $1,290 level as it awaits the USD sentiment.

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.

The extended timeline on the US Tax Reform will add a lot of buyers into Gold – I certainly favour long positioning in GOLD (with the risks of the US Debt Ceiling also looming) looking for $1,320, over the next 2 to 3 weeks, as per the above.

OIL (WTI): $58.75

Oil has traded solidly above $58, and this week is enormous with the OPEC meeting planned, and further cuts prepared may keep this momentum going.

I maintain a bullish bias for WTI.

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 with Crude Oil Inventories this week as well as OPEC.

BITCOIN (BTC): $9,450

Bitcoin has ripped through orders at $9,000 over the weekend and found a base at $9500.

Crypto investors have raced into the bargain levels around $8,250 late last week, so I expect buyers to push this to $11,500, but the question is, will we get a pullback first?

We are now aiming for the psychological $10,000 level, and so close, but failed on first attempt.

Only a matter of time, in my view, and we should see that benchmark run through soon.

For more insights on what is causing the Bitcoin rally check out the Finder.com.au Podcast on my Dealer Page or register for our next webinar.

Macro Themes in Play

• Bitcoin screams through $9,000 and settles around $9,500 with very strong Bids
• USD Traders dissecting the FOMC meeting minutes and USD still soft accordingly
• Oil looks Bullish but is in for a Volatile week