Where’s the gravy this week?

What Happened Last Week

We had another odd-ball week of trading last week with two major geopolitical events screwing everything up.

First, the US tax reform Bill. This is turning out to be yet another screwed up bit of business by the Trump administration that just drags on and on. But it looks like it’s finally going to get through, or a watered down version of it anyway, after Congress passed the tax overhaul bill by a vote of 227–205.

The Senate proposal will be voted after Thanksgiving and diverges from the Congress version with Republicans aiming at passing both and consolidating into a single bill.

But before you get excited and start buying USD’s the positive momentum from the legislative victory was short lived as it emerged that Special Council Mueller subpoenaed the Trump campaign regarding its ties to Russia.

Secondly, the ongoing Brexit negotiations. Another travesty that is screwing up the normal flow of Sterling (& Euro for that matter via EURGBP). This appears to be less resolved then before they even started the negotiations.

These two events are not only distracting traders but screwing up the normal flow of the ‘economics’ in the UK & the USA. Sterling looks like it’s going to be a basket case for some time to come.

But the USD on the other hand maybe about to deliver a pay load. If there is any watering down of the US tax reforms or if they fail to get off the ground at all, then I think we’ll see the USD hammered.

We had the first signs of a potential longer lasting USD sell-off last Friday as US Treasury yields started slipping. I’m already preparing for a few medium term trades based off a USD sell-off and this fits in with Mueller’s latest actions.

The GRAVY – This Weeks Key Fundamental Drivers

Before you get cranked up for this weeks trading it’s important to note this Thursday is Thanksgiving in the USA. That means a shortened weak of trading as most traders in the US take Thursday and Friday off work.

Well it also looks like the upcoming week just got hijacked by the EUR as German Chancellor Angela Merkel’s efforts to form a three-way coalition government failed, raising concerns over political uncertainty in the euro zone’s largest economy.

Now this is a bit disappointing as it means ‘politics’ will rule the roost and it also messes up the USD sell-off scenario I painted above. We now have to wait and see how this plays out but there is a chance there could be another election in Germany.

Key Data Days: Wednesday & Thursday

MONDAY

Stand back and let the market find it’s feet. News that German Chancellor Angela Merkel’s efforts to form a three-way coalition government failed, will unsettle the market somewhat.

It’s better to sit back and wait for full liquidity before jumping in to Euro shorts. This is a fresh story and we really need to see what comes out in Europe before making any trade decisions.

TUESDAY

There’s a mixed spread of data across all timezones with the RBA & BOE in focus.

Key data to focus on:

AUD – RBA Meeting Minutes & RBA Governor Lowe speaks

GBP – Inflation report hearings

USA – Chicago Fed National Activity Index

WEDNESDAY

There’s not a lot to get excited about in Asia or Europe, so the North American will be the main game.

This could go either way with the Thanksgiving holiday on Thursday. Traders will either hit the data hard or sit back and let it go.

Key data to focus on:

USA – Durable Goods, Initial Jobless Claims, Crude Oil Stocks, FOMC Minutes

THURSDAY

The Asian session should be quiet with Japan & the USA on holiday.

There’s a bunch of European data so that’s the session to tune into.

Key data to focus on:

NZD – Retail Sales

German – GDP, Market Manufacturing & Services PMI

EUR – Market Manufacturing & Services PMI

GBP – GDP

CAD – Retail Sales

FRIDAY

I’m expecting the day to be reasonably quiet, but we do have a few bit’s and pieces scheduled in Europe and North America.

Key data to focus on:

German – IFO Business Climate

USA – Manufacturing & Services PMI

Technical Set Up – What’s Happening with the Majors

The majors have discombobulated somewhat as isolated events impact various currencies. So the normal currency correlations are out the window at the moment.

AUDUSD

The Aussie data has been somewhat weak of late and the RBA continues to sit on the sidelines. We get a chance early in the week to see/hear what the RBA has in mind with RBA Minutes due for release and RBA Governor Lowe speaking on Tuesday.

Check our detailed AUDUSD Analysis

NZDUSD

The Kiwi continues to drift lower with very little effort. We have a few NZ releases this week to focus on with Retail Sales on Thursday the highlight.

Check our detailed NZDUSD Analysis

USDJPY

It’s a true reflection of concerns regarding the delays with the US tax reforms. The downside looks like it’s set so I’ll be looking for opportunities to get short.

Check our detailed USDJPY Analysis

EURUSD

The Euro to me was looking like it was getting set for a crack at 1.2000 but recent news that Merkel failed to form a Government may derail this move.

Check our detailed EURUSD Analysis

GBPUSD

Sterling continued to trade in big ranges driven by UK government scandals & Brexit concerns. It’s a tough trade at the moment.

Check our detailed GBPUSD Analysis

USDCHF

The Swissie was a big misnomer last week as it basically traded sideways all week with a slight downward bias. We really need something out of the US to get this puppy moving otherwise the sideways trading is going to continue.

Check our detailed USDCHF Analysis

USDCAD

The Funds has really mixed fundamentals and that’s creating choppy directionless markets as traders scramble from one release to the next. Retail Sales Thursday the key focus.

Check our detailed USDCAD Analysis

Summary

I’m concerned that this week will be dominated by geopolitical events which usually means trading will be random and loose to say the least.

But then again you never really know until we get there. Last week after all had huge anticipation with quite a few major releases, but ended up being pretty average.

So let’s not judge it too hard just yet.

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 days or sessions that work for you and focus in on them. Don’t worry about things that you can’t make.

So tune up your charts & get ready to trade…..see you in the 247 Trade Zone!

Brad

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