Trader Talk

USDX: 93.25

Dollar Index saw a small uptick on Tuesday, getting off the sub-92 levels to lift back to 93.40.

The US Tax Reform has passed the first huge hurdle in the US Senate, with a vote in favour 51 to 49, giving a huge lift to the USD bulls, so expect a strong finish to this year ion USDX and USD across the board.

This can still fall over at the next stage, but it is far more unlikely to.

A move back towards 93.50 looks very likely early this week, so watch with interest the US interim payroll data tonight, as this will likely be supportive for USD higher.

USD JPY: 112.60

USDJPY was quiet most of yesterday around 112.50 before a move higher towards 112.85.
No real catalyst, as the Bond markets were mild.

I think the US Tax Reform story can outweigh the political issues dragging on the USD.

I expect the 113 level to reappear very soon, particularly if the US unemployment rate dips down to 4.0% as it is predicted (in Friday’s headline US Jobs Data).

I still have a near-term target of 113.80.

EUR USD: 1.1830

Euro price action quiet to start this week, dribbling lower yesterday as the USD was firm.

Euro may get an uplift if the end of the week provides a clearer divorce path for the UK from the EU, but the overnight trade saw USD winning this battle, albeit EURUSD in a narrow trading range.

Until we get more headlines surrounding the FBI probe into Russia’s involvement with Donald Trump, we are likely to see EURO consolidate against the USD around 1.1800-1.1880.

I am maintaining my Short biased outlook, seeing the potential for Offers down towards 1.1780 to end this week as we have no guarantees of the Brexit pathway clarity.

GBP USD: 1.3415

Sterling did see some whipsawing price (again) action yesterday which is to be expected as the Brexit negotiations drag along.

My research points towards the Brexit deal being 90% done, which means higher highs are expected in the sterling and the sterling cross FX pairs, but potential for small blips lower in the very near-term.

I maintain my target of 1.3600 for GBPUSD particularly if we get agreement on the divorce from EU payment from the UK.

Watch for the GBP cross pairs to show huge ranges this coming fortnight which we already got a hint of last week in GBPJPY and GBPAUD.

AUD USD: 0.7600

The Aussie virtually unchanged from yesterday, although it did push up 50 pips after the RBA held interest rates yesterday.

The buys nudged the Aussie up to 7650 on the back of the RBA statement, before it reversed completely and came back to 76c where it began.

Today we have the possibility of a slide lower, back to 7550 as the Quarterly GDP data lands on the newswires.

I favour the downside on AUDUSD to end this year around 75c as the US move on rates this month helping the Aussie lower as the Divergence plays out.

Also don’t underestimate the negative SWAP spread on the 2-year treasuries to drag AUDUSD towards 7450 if we see a stellar NFP number for the US on Friday, more likely though is 75c.

NZD USD: 0.6870

The NZDUSD got a small lift yesterday in the Asian dealing session as the RBNZ Spencer speech helped support the Kiwi dollar.

The Dairy numbers overnight were mixed, and NZDUSD back around the familiar 6870 level.

The slide in Kiwi-Dollar towards 6820 should resume now that the USD is BID again, and expect the US Payrolls data this week to be an excuse to buy Dollars as we get nearer to the US rate hike also.

USD CAD: 1.2700

Dollar-CAD lifted off the canvas after drifting as low as 1.2660 yesterday.

I was a buyer at that level in the London session overnight and USDCAD didn’t disappoint, getting back to regain the 1.2700 handle.

The 1.2670 level is a large support price area, and it will be interesting from here if we can form a base at 1.27 for a run higher ion USD optimism & data.

Wednesday US Session sees Crude Oil numbers follow the Canadian Interest Rate announcement, so expect a recovery back around 1.2800.

VIX: 11.33

US Stocks still firm, essentially mildly lower, holding the VIX around the 11.50 level.

More upside potential is quite possible leading into year-end volatility.

This is set for a break very soon, so look for much bigger trading ranges in the coming fortnight as the Headlines roll through regarding Trumps Political saga re Russian meddling into the 2016 Election as well as more US Tax Reform progress.

GOLD: $1,266

Gold totally collapsed ion a vicious spike lower after a quiet day holding 1275, it slammed down to 1260 before finding support.

The USD is still looking strong, now that the US Tax Reform has cleared the first BIG hurdle in the Senate, so I will not be shocked if the downside resumes for GOLD with my renewed targets around the $1,255 marker.

The trading range for Gold has been volatile and looks likely to remain 1255-1280.

This can go either way, so be nimble, but I prefer the upside on a possible USD disappointment out of the political jitters for Team-Trump, PLUS the US rate hike is almost completely priced in.

OIL (WTI): $57.50

Oil holding steady overnight at the 57.50 price point ahead of tonight’s Crude Oil Inventories.

I am still LONG OIL but can see a quieter trading range in the area between $57-58.50.

Price action suggests that we may consolidate around the $58 level for now, still looking for direction heading into next year’s Saudi Aramco planned IPO listing.

BITCOIN (BTC): $11,700

Bitcoin seems very bullish, holding around the 11,750 price, tentative ahead of the milestone $12k.

The CME Futures coming on a likely start date of 18th of December (and CBOE starting next Monday 10th) is the big catalyst here, as this development allows for the Institutional money to get into standardised Futures BTC trading.

For that reason, I can see a nudge above $12,000 this week.
Crypto investors are likely to keep buying pressure, seeing a new target of $13,000 before a sharp reversal with the commencement of Futures trade.

Macro Themes in Play

• US Tax Reform still holding the USD firm, as Treasuries essentially unchanged
• GBP volatile ahead of more Brexit headlines after meeting this week
• Gold slammed lower & Copper followed too, as BITCOIN powers towards 12,000.