Trader Talk Tuesday

 What Happened on Monday > Top 3?

• USD Mixed as Trump Russian saga continues
• EUR/USD Trades to a 23-month high
• OPEC Meeting helps Oil recover, Gold holds $1,255

Outlook

• US Consumer Confidence
• Aussie Inflation data Wednesday
• US GDP data & FOMC

Data & Event Risk Today?

• (USD) US Consumer Confidence – 12am Sydney.

USDX: 93.85

Dollar Index ground higher towards 94 as the clouds surrounding Trumps involvement in Russian meddling in last year’s US presidential election are still hovering.

The markets traded in tight ranges leading into the FOMC rate statement and two-day Fed meeting which kicks off today.

SDJPY: 111.20

USDJPY traded down from 111.10 to a low on Monday of 110.60 before reversing in the US session.

Dollar-Yen has turned up slightly to hang around 111.25 to kick off the Asian session today, and with a quiet economic calendar I would expect a small trading range again.

EURUSD: 1.1640

Euro pushing 23-month highs against the greenback still looks like the best trade on the table right now, LONG.

When EURUSD was trading around 1.1480 I called the first target of 1.1615 then on to 1.1700 and I maintain that view from last fortnight.

The fact that a pullback has occurred, albeit mildly, to 1.1640 means it is (now) at a great BUY entry price level.

GBPUSD: 1.3025

Sterling bounced into action yesterday in the London session, from 1.3000 to 1.3050 before settling slightly lower to end Monday.

Not a great directional momentum in play either way as GBPUSD meanders around the 1.300 handle.

I still favour the upside for Sterling, particularly against the Greenback, but we won’t see a breakout until FOMC.

AUDUSD: 0.7925

The Aussie dollar ended the day unchanged on Monday but it did run higher in the London session to print a daily high of 7965.

Aussie CPI data tomorrow is critical and may be the catalyst to finally breakthrough the 80c level. I can’t see 0.800 popping up before then, but if CPI is solid it certainly will on Wednesday.

NZDUSD: 0.7435

The NZD, much like it’s Aussie cousin traded higher to kick off the week before settling unchanged.

The Bullish bias remains in play for the Kiwi against the USD but is also quite stretched, so beware of potential snapbacks towards 7350 is the FOMC statement fails to reinvigorate the USD bulls.

I still prefer to be long with an upside Target of 7500 even though I am a bit cautious of a potential move back.

USDCAD: 1.2505

USDCAD was a bit surprising yesterday, grinding lower even dipping under the 1.2500 handle briefly, to a low around 1.2483.

The continued CAD strength was helped in most part from Oil recovering a little after the OPEC production cuts plans for Nigeria & Libya were discussed again at a key meeting in Russia.

That headline helped Oil recover & USDCAD slide but it has found its way back to 1.2510 since.

VIX: 9.43

The VIX remains remarkedly low as the Nasdaq found new highs, but the DOW & SP500 ended the day lower.

Whenever VIX stays this low for too long, big swings in volatility are normally around the corner.

GOLD: $1,253.50

Gold traded around the 1255 level most of the trading sessions to start this week.

Caution will be seen in the Gold price rally as the potential for USD rally and therefore a Gold price reversal lower is still possible if the FOMC statement helps the USD bulls on Thursday morning.

I am still LONG Gold looking for higher highs to kick in very soon as the markets price out rate hikes to later this year, notably December.

Oil (WTI): $45.50

The big news for Oil is the planned production limits that OPEC are seeking to get agreement from Libya & Nigeria. Those headlines helped Oil recover from 45.40 back to 46.50.

The ping price actions remains constrained to the $43-$48 price range for the time being.

Macro Themes in Play

• Euro Looks very strong, poised to breakout if the FOMC fails to deliver
• Aussie Dollar consolidates back on the 7930, awaiting Aussie CPI tomorrow in the Asian session.