Trader Talk

USDX: 93.15

USDX was hit yesterday after talks of US government shutdown.

The US Dollar volatility continues to be quite wild and yesterday was a down day for USD, dragged largely by Trumps speech reference to government shutdown plus the looming debt ceiling limit.

Janet Yellen is the next key piece of the USD sentiment puzzle.

USD JPY: 109.10

USDJPY took a tumble yesterday, trading down as low as 108.80 again before a mild bounce back.

Dollar weakness always plays out nicely in USDJPY and tomorrow was no different as USD was sold against all major FX pairs except the GBP.

Janet Yellen is likely to talk back the USD prospects of a December rate hike with potential to therefore snack back towards 110 if she is very bullish, but USDJPY should hang around 109.00 leading into that commentary.

EUR USD: 1.1800

Euro traded higher on Wednesday, fuelled by ECB speech combined with the softer USD.

When the ECB decide to signal to the market that QE unwinding is possibly on the agenda, the EUR can scream much higher particularly against the USD and JPY. Will that happen this week?

The timing of this coming into reality is still unclear but if Mario Draghi uses this week to talk of the upbeat projections for Eurozone recovery, then a move higher towards 1.1900 is likely.

There is also the potential for a move up towards 1.2000 if Draghi really hints at ECB QE rollout at the Jackson Hole economic forum today & tomorrow.

GBP USD: 1.2785

The Sterling was very weak yesterday against the USD, which displays just how much downside pressure there is, as the USD was soft yesterday!

Ongoing uncertainties about Inflation and BREXIT mean that the BOE is likely to have to sit on their hands a little while longer in terms of UK interest rate hikes.

We thought 1.2800 would hold, but that has just broken down in today’s Asian session open of trade, so now 1.2750 is more likely. Remember to watch for the second estimate GDP data tonight after the London open possibly a catalyst for a better entry if that data is positive.

AUD USD: 0.7900

AUD found support yesterday moving up to 7930 before a retreat to 7900.

Will the Aussie consolidate back above 7900 or continue to move lower? Looks like it will stay in a holding pattern and then
I would suggest that Janet Yellen can fuel a move back to 7850.

I have seen may times in the past the key level of 7850 act as a magnet for price action so watch this pair closely.

NZD USD: 0.7315

The London session overnight saw the 7200 levels hold firm, but that was more about USD softness than the Kiwi.

The NZ GDP revisions lower yesterday saw NZDUSD spiral lower from 7300 back to 7200 in a sharp continuation.
This pair remains under heavy pressure but I suggest traders be careful regarding Janet Yellen’s giving the USD bulls some fuel to re-enter USD longs.

If that happens, look for 7150 levels but failing that, we should finish the week at 7250.

USD CAD: 1.2550

USDCAD traded lower again on Wednesday on the back of USD softness.

The 1.2550 level may find technical support for an attempt at a bounce but that will need fuel such as Janet Yellen this week.

Look for a break above 1.2600 possibly spurred by optimistic commentary potentially week for the USD.

VIX: 12.25

The volatility index bounced back yesterday fuelled by US Politics in the headlines again selling down USD and dragging on Stocks.

Expect Janet Yellen to boost volatility tomorrow sharply as she can be a huge fear gauge catalyst as the USD drifts lower on Trumps instabilities and uncertainties.

GOLD: $1,288

Gold is very volatile currently as the USD falls into favor and out again very sharply.

Price action again traded higher towards 1290 before a small reversal just now in Asian dealing.
Breakouts this week are imminent.

Gold is going to be very volatile this week as the markets await ECB and Janet Yellen commentary, but the likelihood of plus 1300 moves seems high.

OIL (WTI): $48.40

Oil traded higher yesterday, as I called, and helped by Oil inventories data supporting less surplus in the market.

Some momentum from here is very possible, for a run towards $50/$52.

Macro Themes in Play

• US Debt Ceiling & Gov. shutdown hurts USD
• EURUSD Looks like breaking out higher on ECB Draghi speech.
• USD sentiment is very volatile, but markets are awaiting the key commentary from Janet Yellen tomorrow.