Remember when a Trump presidency was going to signal the end of a December Fed rate hike and send the US dollar tumbling through whatever levels of support stood in its way?
USDX Daily:
USDX is ripping the faces off shorts (and the calls of many top banks) as it heads vertical toward swing highs.
The thinking here is that a Trump presidency is going to inspire the growth and inflation needed for the Fed to in fact stay on course, and hike in December. Fiscal policy helping monetary policy achieve their economic goals? This is the type of positive change that a Trump presidency is hoping to implement by doing things slightly outside the norm.
With futures markets now pricing an 86% chance that the Fed raises rates in December, picture the carnage to markets if they now said no. That is your trading risk from here.
Moving onto some specific charts and yesterday we spoke about there possibly being opportunity to fade any earthquake related panic selling in NZD/USD as the pair headed into horizontal support.
NZD/USD Daily:
I’ve added the blue short term trend line to today’s chart which just happens to coincide with the horizontal level in question. Wherever you can find obvious (key word) confluence, you should draw it in.
NZD/USD Hourly:
Zooming into the hourly chart, you can see the way that price held the daily level and is now retesting the underside of that blue trend line.
In a longer term bullish trend, after bouncing off higher time frame horizontal support, I would lean toward price re-activating the trend line and carrying on higher no matter what the USD is doing. We’ve seen the disconnect between USD and Kiwi/Aussie clearly in the post-election fallout.
If you already got long Kiwi yesterday down there, then you have nothing to lose in seeing how it plays out from here anyway.
Best of probabilities to you!
On the Calendar Tuesday:
AUD Monetary Policy Meeting Minutes
EUR German Prelim GDP q/q
AUD RBA Gov Lowe Speaks
GBP CPI y/y
GBP Inflation Report Hearings
USD Core Retail Sales m/m
USD Retail Sales m/m
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