Trader Talk

USDX: 93.25

Dollar Index traded steadily lower back off 93.50 to find bottom at 92.090 yesterday.

The US Dollar is alarming soft amid all this hype surrounding the Tax Reform likely to pass through this week.

The US 10-year Treasuries lifted late in the New York dealing session, seeing an uptick in USDX back to 93.25 in what seems a cautious trading momentum.

USD JPY: 112.55

USDJPY had a fairly quiet start to this trading week, hovering around the 112.60 level across all three sessions.

The Bank Of Japan are out this Thursday, but not expected to alter their path until 2019, so expect very little in the way of fireworks for USDJPY this week, on the Yen side anyway.

I think the USDJPY pair can hold up towards 112.80-113 this week as market liquidity thins towards the quieter last week of the calendar year.

EUR USD: 1.1780

Euro had a solid Monday trading higher and higher gradually from the open around 1.1735 to 1.1830 before a retreat.

This move in Euro can certainly be seen as a great reflection of the USD softness as the US Tax Reform story seems priced in.

I am maintaining my outlook towards 1.1750- 1.1780 range for EURUSD in the near-term.

That comment is based on the ECB Draghi quotes from last week in relation to “Stimulus needed for some time to come”, as this will have a profound impact on sentiment.

GBP USD: 1.3380

Sterling started very strong yesterday and move 90 pips higher in a sustained grind higher.

GBPUSD volatility is very high, but it is still displaying Bullish signs after another strong uptick in London dealing yesterday in the middle on the ongoing Brexit negotiations.

I maintain my target of 1.3600 for GBPUSD particularly if we get agreement on the divorce from EU payment from the UK, however despite this process moving to the next phase the Sterling took a firm hit.

AUD USD: 0.7665

Aussie Dollar traded in a narrow range on Monday after the weekend saw the Australian government majority retained after local elections helped the Aussie PM Turnbull’s power hold on.

Notably, the AUD USD stayed above the 7650 level ahead of the Monetary Policy Meeting Minutes on the Asian open this morning.

Copper is strong and supportive for the AUD holding up, but I still favour a possible move lower to close out this year around 7550.

NZD USD: 0.6995

The NZDUSD came alive last week, and has remained solid to carry through momentum around the 70c level.

The NZDUSD may see some volatility this morning around the ANZ business confidence & AUD related Monetary policy, but latest run up as been an unwind of the NZDUSD short positioning.

Maybe this pair can play out a run towards 7060 as my near-term target as some profit taking in USD longs can possible fuel this pair higher, particularly as the US Tax Reform story is seemingly priced in.

USD CAD: 1.2865

Dollar-CAD has held onto the recovery around 1.2850, drifting towards 1.2870 as I write.

The Bank OF Canada did a very good job of lifting the CAD last week, but that has reversed pretty quickly.

The USDCAD pair now seems a bit sideways in a cautious move across the charts ahead of this week’s developing US Tax Reform progress.

Look for a move back above 1.2900 in my view.

VIX: 9.53

US Stocks were very strong overnight, again lifting higher, keeping the VIX under 10.

The year-end volatility potential is always high, particularly as trades switch off for the year, but the US Tax Reform story still holds the cards on this move.

We need a big risk off jolt to see VIX breakout of this stagnation in my view.

GOLD: $1,261

Gold rebounded beautifully and took advantage of the USD weakness overnight.

My year-end target of 1255-1260 looks very likely to be the end of a volatile trading year for the yellow metal, even with the swift uptick to 1264 last night in the US session.

Gold has traded sideways since Thursday’s rate hike in a stalemate around 1255 but it is certainly enjoying the USD softness currently evident across the board.

OIL (WTI): $57.35

Oil is trading back around $57.50 amid a nice bounce in sentiment to close out last week.

The US Crude Oil Inventories should have propelled a move above $58.50 last week, but volatility was wild and was tilted to the downside.

Price action suggests that we may consolidate around the $58 level this week as liquidity may thin out a little.

BITCOIN (BTC): $18,850

Bitcoin has now kicked off in the CME Futures trade as of yesterday.

Over the weekend we saw a run up towards $19,500 in a very bullish move led by Friday’s price action.

The CME Futures have seen a soft open with price action moving back swiftly from 19250 to 17850 before another turn-around Higher.

For that reason, I can see no stopping this price action until $20,000, even with the current intraday pullbacks.

The buyers seem happy to step in each time there is a blip lower, with is a bullish pattern.

From 20K I can see a sharp reversal, as I have been saying for a few weeks.

Macro Themes in Play

• USD is soft even with the Tax Reform story getting close
• GBP volatile, back above 1.3380
• US Stocks aiming higher & higher, for now.