Trader Talk

USDX: 93.00

USDX trades lower and resets at 93 after a strong week.
The Dollar traded lower amid lower moves in treasuries as well as the latest polls suggesting that the slightly dovish Powell may be Trumps choice for the new Fed Chair.
It makes sense because keeping with a status quo approach will keep Stocks high, which Trump moves taking credit for.
US Second tier data was good overnight so we may see USD buyers come back in and lift USDX.

USD JPY: 112.65

USDJPY turned sharply lower from 113.10 to run down to 112.30 as the USD was Offered across the board in US session dealing.

The USDJPY should be more like 115 fair value in my view, as the divergence is very clear in these currencies, but the Japanese election will make this pair interesting too.

A nudge back to 113 seems very possible in the short-term market action.

Tonight’s speech from Janet Yellen may see an uplift in USD but consolidation to end the week seems more likely.

EUR USD: 1.1850

Euro traded steadily higher to get back to 1.1850 in a pure USD selloff price response.

The range for EURUSD may be confined to 1.1750 – 1.1850 as it may ping pong with intraday sentiment and treasury spreads until the ECB is clear on the exact QE unwind game plan.

The USD is strong so I would favour a possible soft move back towards 1.1700 amid the possibility of ECB slow unwind which is not supportive to EURO being higher faster also.

We may see sellers step in from these levels.

GBP USD: 1.3150

Sterling traded back about 50 pips on Thursday with the ongoing Brexit negotiations not helping the risk appetite in the GBP at all.
The UK Retail Sales data was a slight miss overnight but the GBPUSD was drifting lower before then, so the markets used that as an excuse to reset back to 1.3150, still within familiar ranges.
That is the way it is currently for the GBP, very much ping-ponging between 1.33 – 1.30 awaiting clear progress in the BREXIT negotiations, which do seem like a stalemate so far.
Watch for Brexit headlines to be in control for this pair as the USD isn’t driving it, seemingly Brexit fears are.

AUD USD: 0.7875

The Aussie saw a 25 pip move higher as the Aussie jobs data was good yesterday, plus the China data was supportive, being as per analyst’s expectations.

The RBA commentary is mixed but also the Aussie is hurt as the USD buyers get back into Long Dollar positioning.

This good data for Australia may be interesting to play out in the cross pair AUDNZD particularly with the potential for NZD to disappoint once we see the election results create assumptions on forward guidance for the Kiwi.

I can see potential for 1.1300 in AUDNZD as it didn’t stop after crashing higher to the 1.12 handle yesterday, but as for the AUDUSD is seems stuck to 7850-7880. Not an easy one to trade in its current ranges.

NZD USD: 0.7015

The NZDUSD is on a knife-edge today after NZ Election result puts Labour into power and puts NZDUSD dangerously close to breaking down below 70c.

That’s how I can see this playing out, a knee-jerk move to 6950 with potential for lower lows.

The sell down will likely trigger stops under 70c so I expect that we see the 69 handle in the coming few trading days ahead of US Fed changes and markets absorbing the impact of Labour winning power in New Zealand.

USD CAD: 1.2480

Dollar-CAD is in for an interesting week as we have Gold rallying, then reversing, Oil seeing a big story out of Iraq (which also fizzled out mostly), as well as stronger USD on the speculative positioning for who will be the new Fed chair.
The Canadian CPI tonight will be pivotal for the USDCAD and CAD crosses as we try to decipher when the BOC will move rates again.
Remember how sharply the USDCAD sold down last time we had USD uncertainty (Powell being new fed chair favourite may drag USD a little), plus we know that th4e BOC will move on rates, it’s just a matter of when?
USDCAD Short seems very possible if a break below 1.2430 comes into play tonight.

VIX: 10.05

The Stocks rally found new all-time highs, DOW hitting 23,000 overnight amid fresh optimism around the US outlook.

VIX moved slightly higher, lifting above 10 for the first time in a while, but still drastically low.

The Fed chair story will be large and could be very USD supportive and see VIX drop back under 10 in my view, but I never trust low volatility for this long.

I am still wagering that we see a spike to 13 or 14 (or even higher) led by a serious stock market selloff before this year ends.

GOLD: $1,290

Gold is battling with the 1300 ceiling but got a lift yesterday when the USD pulled down.

Treasuries dipped lower, dragging on USD and helping therefore to Lift Gold higher.

If the hawkish incoming Fed chairperson is appointed, namely Taylor, we may see Gold back at 1260-1250, but with Powell the favourite, Gold should crawl higher, towards 1300.

OIL (WTI): $51.60

Oil is back under $52 amid Russia commenting that they are happy with $50 Oil.

Expect some rangebound trade today between the narrow $51-$52 price band.
The range for Oil has tighten up and it is a little passive now as the Iraq story has blown over.

In fact, I am prepared to say that we will get stuck in a $50-$52 range for a month or more.

BITCOIN (BTC): $5,720

Bitcoin is holding its ground very firmly, which is a BULLISH signal to me.

It is trading very close to the all-time high, so this may be a case of taking 3 attempts to finally break through $6000.

Once price action clear through 5850 on the upside, we are in unknown territory, so look for another acceleration towards $7500.

Be careful though, pullbacks can ruin your Trading Day very quickly, so best to under trade your account.

Macro Themes in Play

• NZD Collapsed under the political weight of Labour winning the NZ election
• EURO lifts but GBP Trading very heavy
• USD mixed as the Powell Fed Chair favouritism seems likely to hold USD from ripping higher.