What Happened Yesterday

With the US tax reform bill dragging on the markets are starting to feel a lot like ‘Groundhog Day’.

One day there’s a bit of positive buzz around the possibility of it getting through, followed by a day of negativity from possible delays. All in all it’s very draining and tiresome.

All we can do is focus on what’s in front of us and wait…… the good trades will pop up before you know it.

The U.S. currency had edged higher after Republicans on the House-Senate negotiating committee on Friday put the finishing touches on a sweeping tax overhaul that involves large cuts in levies on corporations.

But it slid on Monday on uncertainty that the bill would indeed be pushed through, and with some doubts also creeping in over the pro-growth effect the tax reforms would have.

Top Republicans are confident the U.S. Congress will pass the tax bill this week, with a Senate vote as early as Tuesday and President Donald Trump aiming to sign the bill by week’s end.

Despite the dollar’s latest dip, some analysts believe there is further room for it to go higher.

Economic forecasters expect lower corporate taxes to raise U.S. growth by roughly 0.5% over the next year, potentially lifting the pace of interest rate increases from the two priced in by the market to closer to the three consistently estimated by Federal Reserve policymakers.

The Euro & Sterling both benefited from the dollar’s weakness, whilst the AUD, NZD, YEN & CAD all traded sideways.

Technical Set Up – What’s Happening with the Majors

The majors are basically trading sideways within recent ranges. Euro and Sterling are trading withion large ranges whilst the rest of the majors have been pretty contained in tight ranges.

AUDUSD

It’s shrugged off weak data to now sit at the top of recent ranges. I still like it lower but we are now waiting for the fundamentals to kick in with clear direction.

NZDUSD

I’m starting to think we’ll see the Kiwi higher as all negative data has been factored in. The key from here is the US tax bill.

USDJPY

A lack of solid USD direction has it chopping about the place. I’m waiting for the final outcome of the US tax bill.

EURUSD

I like it lower overall but it’s trading the range really well as we await the US tax reform bill.

GBPUSD

It continues to trade in a large range as Brexit and US tax reform continue to drag on.

USDCHF

Continues to trade sideways, albeit in a large range, as we await the outcome of the US tax bill.

USDCAD

Continues to trade sideways as we await clarity on the USD. Oil has also stabilised around $57 and that too is having a sideways trading impact.

What’s the Plan for Today?

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There’s not a lot on the books today except for some Housing numbers out of the US.

But this is where your attention to detail comes into play.

The NZ Business Outlook data is due and last month is came out -39.3%. This was huge variance from the forecast and led to a quick 40 point move to the downside in NZD.

So I’ll be watching that closely today and if we see a reversal in the data then we may have a good trade on.

Otherwise we’re basically in a ‘holding pattern’ as we await the outcome of the US tax bill.

It’s boring I know but it’s very important you remain patient.

Today’s Fundamental Drivers

There’s only a few bits and pieces scheduled today so don’t waste too much time in front of the screens.

With the US tax bill waiting in the balance the data may not even impact as traders wait for the ‘final outcome’.

Today’s Focus – Major Currencies in Play

You need to follow the economic data releases & best technical set ups to work out where the majority of action and interest will be.

NZDUSD

Technical Set Up: Support 0.6980 & Resistance 0.7025

Fundamental Driver: NBNZ Business Outlook

Potential Strategy: I’m looking for a reversal in last months weak data. If it does correct then the topside is the trade.

Upcoming Webinars

Join us for the 4th of a 5 part Series on: How do Bankers trade forex?

Part 4: Where are you supposed enter the market? I’ll run you through the way the bankers read their charts.

In the fourth part of this 5 part series we look specifically at entry levels – Technical Analysis.

This is the most misinterpreted component of trading. Of course you can get in anywhere but how about reducing your risk and increasing the probability of success. That’s a good idea don’t you think?

That’s because most retail traders get their knowledge from ‘Google’ or from unregulated inexperienced goons hoaxing as ‘experts’!

Technical analysis is not about shoving as many Indicators on your charts that you can find….far from it.

It’s simple, methodical and extremely precise.

WHEN:

USA – 7.00pm Wednesday 20th December

UK – 12.00am Thursday 21st December

AUST – 11.00am Thursday 21st December

The webinar will go for around 30 minutes – short and to the point!

Plan the Trade, Trade the Plan!

The idea of our “Market Insight” is to give you some guidance into your daily preparation.

Make sure you don’t waste unnecessary time in front of the screens.

Remember you need to be fresh, confident and ready to trade and by sitting aimlessly in front of your screens you will become stale and uncertain.

The key to your sucess: Isolate the opportunities that work for you and focus on them.

Don’t worry about things that you can’t make…..chasing them will only cause problems (tiredness & irrational behaviour will take over).

Tune up your charts & get ready to trade.

Brad