Trader Talk

USDX: 93.00

Dollar Index traded steadily back off the 93.50 level to rest and settle at 93.

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

The US Dollar looks a little tentative and may likely trade in a narrow range from here with some traders doubting the impact of the new Tax Reform plans for the US.

USD JPY: 113.00

USDJPY regained the 113 handle tracking the late surge in US Treasuries overnight.

The Bank Of Japan is out with their latest tomorrow, 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, so I expect a slow grind higher.

I think the USDJPY pair can hold up towards 113.30/113.50 this week as market liquidity thins towards the quieter last week of the calendar year, post-Bank Of Japan.

EUR USD: 1.1845

Euro did a quiet grind back towards 1.1850 yesterday in a fairly sleepy Tuesday trading session.

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 or has some level of doubt hanging over the impact.

I am maintaining my outlook towards 1.1780 target price range for EURUSD in the near-term, for year-end.

That comment is based on the ECB Draghi quotes from last week in relation to “Stimulus needed for some time to come”, can have a resounding impact on the big flow and larger position in this pair.

GBP USD: 1.3400

Sterling is back to 1.3400 against the Greenback in a bullish move once again overnight.

GBPUSD volatility is very high, but bear in mind that with the re-vote tomorrow regarding the Tax Reform, we may see a continuation in this GBP strength, particularly against USD of course.

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

AUD USD: 0.7655

Aussie Dollar traded in a narrow range again on Tuesday, 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 around the 7650 level even with a mixed USD sentiment, which tells me that it may reverse lower.

The RBA Meeting minutes were much of the same story yesterday in terms of the AUD outlook, supporting the lingering price action around the 7650 level.

My outlook remained skewed to the downside with a very near-term target of 7550 as the Tax Reform passes, likely.

NZD USD: 0.6955

Milk prices hit the Kiwi overnight seeing Offers back under 70c, in a sharp move to reset at 6955.

The NZDUSD may see some follow through selling, but I would suggest that this will fizzle out at 6930.

Tomorrow we have the NZ GDP data which I can see be a useful catalyst for a little more selling potentially.

USD CAD: 1.2875

Dollar-CAD took a run up to 1.2920 overnight in the US dealing session as the US yields Spiked higher, supporting the Dollar.

The Bank OF Canada comments from last week have now been repriced by the FX spot market, with bullish bias flipped nicely in upward momentum moves in USDCAD.

The USDCAD has dribbled back off last night’s level, to 1.2870 but likely buyers step in again shortly, possibly.

Look for a move back above 1.2900 in my view, as I said yesterday.

VIX: 10.03

US Stocks have pushed up to dangerously high levels, dragging the VIX to all-time Lows.

The year-end volatility potential is always high, but we saw just a mild pullback off the record levels in SP500 overnight amid US Tax Reform re-voting plans set for tomorrow.

That lifted the VIX slightly above 10, but basically unchanged and looking to breakout higher, only question is when?

GOLD: $1,264

Gold is trading quite resilient this week, holding around the $1,264 level.

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 last Thursdays rate hike in a stalemate around 1255 but it is certainly enjoying the USD softness currently evident across the board.

Be careful the US Tax Reform story will have an impact on USD and GOLD very quickly.

OIL (WTI): $57.75

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

The US Crude Oil Inventories tonight will likely see us back above $58 possibly, in my view.

Price action suggests that we may consolidate around the $58 level this week and then look to move to $60 early in 2018 leading into the Saudi Aramco listing.

BITCOIN (BTC): $17,000

Bitcoin kicked lower very sharply as I have been calling for a few weeks after a shocking headline surfaced that a Korean Exchange was hacked and has to subsequently file for bankruptcy.

The other huge driver in selling pressure, is a shift for some into Bitcoin Cash.

The price action got down to 15800 before a decent recovery but I remain bearish now looking for more selling over the coming week and a half to close out this calendar year of trade.

The CME Futures have seen a soft open with price action moving back swiftly from 19250 to 17850 which was a great signal to some Short-Sellers in the Bitcoin Futures market.

The buyers seem happy to step in each time there is a blip lower, with is a bullish pattern, so maybe we do see $20,000 and then the sharp reversal (that has to happen) will follow suit.

Macro Themes in Play

• USD is mixed ahead of next US Tax Reform Vote
• Bitcoin slams $3k lower as first major selloff jolts markets
• US Stocks still holding most of recent gains in a BUMPER year for Equities