There is no point fence sitting. You need a conviction to make money and then trade that conviction. The call I am making today is that the USD selling for 2017 is over. The next big move for the USD into year end is bullish. The market has run out of reasons to sell the USD and moving forward there will be plenty reasons to buy it !
Trumps tax policy is a big deal. It will be biggest change the US economy has seen in decades. His administration is working hard on the policy and we are getting closer to getting the details. The noise has started. Make no mistakes it will be very USD positive. Add to this the fact the US economy is printing solid numbers. Overnight the ADP report well exceeded expectations and reminded the market the US is at full employment. Payrolls Fri will cement this. Q2 GDP last night was also revised higher to 3% from 2.7%. Thats healthy ! Anyone thinking the Fed wont raise rates again in Dec is kidding themselves. The market is well and truly mispriced with odds of a hike sub 50%. When this is repriced it will support the USD. Oh .. and the Fed is about to start Balance Sheet reduction this month as well. Any USD offers out there please?
Technically as yesterdays DXY chart showed we had a finally wash out of the USD. It broke the multi year lows sub 91.90 but set up a false break and classic bear trap. Post that overnight we got more follow through momentum on the USD move. Its now doing a very quick and good job of isolating that low. Across all the USD currency pairs very ominous top formations are brewing . The risk/commodity currencies most obvious. Aussie a monster Double top on daily charts, Kiwi large H&S, and Cad Monster Double Bottom. These have been months in the making so when they go… expect momentum move and targets a long way out ! USDYEN and USDCHF also have big topside necklines waiting of bottom formations that will send them also sharply higher.
The market is still positioned extreme short USD. This is also very bullish. Once the market starts to unwind this positioning we will have big moves for the USD. Being contrarian now makes a lot of sense and getting long USD at the start of the move that should take us to at least year end will be very profitable.