Trader Talk

USDX: 94.70

USDX traded strongly overnight and is talking a run towards 95 as I called early this week and with tonight’s GDP data – it should get there.

Dollar Index moved from around 93.50 to 94.70 in a resounding Bullish move as the US Tax reform gathers pace & support.

This is going to be a big story for the USD, so potentially 95.50 is on the cards.

USD JPY: 114.05

Dollar-Yen again above the 114 handle mildly, looking more and more Bullish.

USDJPY got a small handbrake on an early Asian session rally today by an uptick in the Tokyo CPI, but markets will shrug that off and drive USDJPY towards the key resistance at 144.40 and above today.

The Dollar bulls will jump back into the LONG USDJPY trade with any positive headlines around the US tax reform or the tier 1 US data tonight, but more-so as the Tax reform story unfolds positively.

I still favour a play towards 114.50 and then perhaps on towards 115.

EUR USD: 1.1630

Euro traded back sharply from 1.1835 to 1.1635 as ECB’s Draghi announced a cautious tapering of Eurozone QE. The lower for longer mentality is Euro negative, as I called in our Weekly Outlook video.

The LONG EURUSD trade seems quite crowded, holding EURUSD around 1.1835 leading into the key ECB meeting, which is why it snapped lower so fast as the press conference tone was absorbed by traders.

Expect Lower lows towards the Key support around 1.1620, the 2015 high.

The risk is certainly skewed to the downside even after last night’s selloff, so watch out if that key support breaks on the downside, which I feel that it will.

GBP USD: 1.3125

Sterling was a big mover jumping from 1.3275 to 1.3125 on the back of USD strength.

Remember we are likely to see a Bank Of England rate hike next Thursday so the potential for a snapback is very high from these 1.3120 levels.

Overall the GBPUSD looks very heavy, but leading into a rate hike I prefer to sit on the sidelines, as likely 1.3200 will resume next week.

AUD USD: 0.7645

The Aussie slammed under key supports at 77c and even took out 7650 this morning amid the USD strength.

Looking at the weekly charts for AUDUSD there is very little support at these levels, so we may slide towards 7555.

The CPI this week missing estimates will continue to play out as the USD gains pace, so no bounce likely until 7550.

NZD USD: 0.6820

The NZDUSD is under pressure and still looking very heavy, now firmly under 6830.

Yesterday saw continued moves lower as the new Labour NZ team announced proposals that will hurt the RBNZs ability to raise interest rates unless the NZ labour market is robust.

These hurdles should keep the NZD Offered today and for the coming trading days as we see the cabinet announced for NZ Labour Government this week.

The NZDUSD is likely to find support around 6800 but lower lows are also very likely over the next 3 months, so I love the Long AUDNZD play for a run to 1.1330.

USD CAD: 1.2685

Dollar-CAD provides a big opportunity this week in my view, as the USD find more and more Bidders with the US Tax Reform gathering pace.

That played out beautifully in US session dealing on Wednesday night as the bank Of Canada held their interest rates at 1%, as we called.

The target level of 1.2800 was reached, and surpassed swiftly, so expect a move towards 1.3000 in the coming weeks!

VIX: 11.30

US Stocks traded quite wildly last night, but in the end the VIX is pretty much unchanged.

Still holding around 11 for now, but certainly showing signs of a breakout higher soon, before this year-end.

Maybe Trump’s visit to Japan next month will stir up the North Korean issue and we may have the catalyst for a jump in VIX above 13 and Stock market correction (lower)!?

GOLD: $1,266

Gold is pointing south very sharply here as the USD strength is firming up.

Gold was Offered back towards 1265 overnight and may take a run towards 1250 if the US tax reform story plays out, as I have been saying all week.

If the hawkish incoming Fed chairperson is appointed, namely Taylor, we may see Gold back at 1250, but with Powell the favourite, Gold should hold around 1280 levels.

OIL (WTI): $52.70

Oil was grinding higher slowly in overnight trade, consolidating above $52.

Price action suggests that a new support base at $52 will help Oil prices lift again, in bullish signs.

The range for Oil may reset to $52-$55 depending on tonight’s data release & month-end positioning in the Futures markets.

BITCOIN (BTC): $5,980

Bitcoin found solid upward momentum last night, aiming towards $6k or above once again.
It is only $50 under that milestone level as we speak.

A run up to $6,250 to finish this week is what I can see based on price action in BTC.
The momentum has switched to be strongly bullish again after the midweek lows.

Macro Themes in Play

• EURO Slammed lower with Dovish ECB Taper Talks, looking for support
• USD Sentiment is very Bullish, driven by Tax Reform & New Fed chair speculation
• Commodity currencies all under pressure as Aussie & NZD data missed expectations, BoC holds rates for Canada.