Monday Market Action

Daily Trader Talk – Monday 24^th July

What Happened on Friday > Top 3?

> Oil price slides, Gold storms Higher

> EUR/USD Trades to a 23-month high

> Trump headlines aren’t good for USD stability

Outlook

+ Aussie Inflation data Wednesday

+ US GDP data & FOMC

+ Trumps political rumblings linger, dragging on USD

Data & Event Risk Today?

• (EUR) Eurozone Manufacturing PMI data – 5 & 6pm Sydney.

USDX: 93.75

The Dollar Index held onto last week’s losses to close of the week under 94 as the headlines for Trump continue to drag on the USD outlook.

This week’s key FOMC rate statement might provide the much-needed bounce for the USD but there are no certainties there.

USDJPY: 111.00

Last week I called a move to 111 and was on the money as BOJ offered nothing new to help the Yen.

The real driver was the USD softness, which was the dominant theme all of last week and now looks like dragging dollar-yen under 111 today in the Asian trading session. We may see June lows around 109.50 if the FOMC statement or US GDP fails to fire up the USD bulls.

EURUSD: 1.1680

Euro pushing 23-month highs against the greenback and looks very strong.

A break on the upside above 1.1715 shows no resistance towards 1.1800 on my weekly chart analysis.

Apart from today’s Eurozone Manufacturing PMI data, we have a light economic calendar this week so the USD will be in the driver’s seat for this pair.

GBPUSD: 1.3000

Sterling traded back up to 1.3000 to close off the week after trading as low as 1.2940 amidst a wild trading week across most of the major pairs.

The Euro rally dragged EURGBP from the 87 handle to just shy of 90.00 but the commentary from BOE played its role in softening the GBP.

So, where to next for GBPUSD? It looks like taking a backseat to the USD swings in momentum and therefore I favour the FOMC statement to fuel a USD reversal, pushing GBPUSD back to 1.3100.

AUDUSD: 0.7925

The Aussie dollar came within 11 pips of the key 80 cent level last week, but rejected it fiercely.

Like I said last Friday the RBA speakers will drive AUD to 7900 or 8050 and the downside prevailed as the key quote from RBA’s Debelle was:

“Aussie Rates do not have to rise in line with global peers”.

That commentary was enough to show their hand, obviously signalling that the RBA won’t look to hike just because it’s fashionable with other central bankers.

The AUDUSD is pushing back up to start this week but those comments from RBA’s Debelle will resonate deeply in the AUD pullback this week if USD data is positive.

NZDUSD: 0.7455

The NZD still very solid after finding more Bidders from 7350 moving another big figure higher.

The Kiwi seems comfortably in an uptrend whilst it holds above the key 7350 after a huge run from May lows around 6830.

Stay with the trend towards 7500.

USDCAD: 1.2535

USDCAD continued its enormous run lower on Friday, sliding to fresh lows around 1.2520 as the Canadian CPI data came in as expectedly soft.

The retail Sales data for Canada was good, BUT, the Oil price slide was significant on Friday so USDCAD had every reason to bounce back up, but didn’t.

I still favour a USDCAD sharp bounce and I am expecting buyers to step up to the plate this week on the USD GDP & FOMC statement.

VIX: 9.36

Volatility Index still sub 10 and unchanged again in overnight trade but this could be the week that the USD pushed back in the Fed meeting statement reminds the markets that another Rate hike is on the table.

Volatility will change this week as the central theme is the key USD sentiment.

GOLD: $1,257

Gold traded higher all of last week as I called back from 1211 price levels.

LONG Gold is still one of the best trades on the table, particularly with Trumps uncertainties, but watch for a pullback this week if the FOMC does its job to re-inspire the USD bulls.

If the US Data & FOMC disappoints then we are looking for Gold at 1270 but I feel it may go the other way and retreat to 1250.

Oil (WTI): $45.75

Oil again turned lower on Friday to remain in the familiar $43-$48 range.

Almost as if right on time as it approached $48 it turned south again.

The OPEC planned production cuts for Oil have been heard but not believed by a lot of large Oil speculators, hence the price got hit lower again on Friday.

Macro Themes in Play

• Euro presses on to hold Strong gains, approaching 1.1700.

USDJPY looking heavy as Trumps political rumblings are not good for USD, but great for Gold.
• Aussie Dollar consolidates back on the 7900 handle on RBA Debelle comments.