A strong US NFP Jobs Report was countered by weak wage inflation data and the USD was sold off after a battle suggesting the market is ready for USD correction. The trading so far on Monday supports this although with Japan away we should not read into USD/JPY weakness too much. That being said the Aussie Dollar is enjoying the best gains and is back above 1.0500 on the key AUD/NZD cross. Oil has not got the memo however and trades near fresh cycle lows under $48/bl.
EUR/USD is attempting to correct against the USD but is struggling to get solid gains as traders are cautious to buy the single currency before the widely expected ECB QE on Jan 22. Above 1.1910 i think we gain traction to retest 1.2000. EUR/USD has failed to impress in recent months when it has staged rallies and i will look to the other major pairs if selling USD.
The USD/JPY failed to reclaim 120 last week and when the US Bond Yields slumped on Friday we saw USD/JPY and the Yen cross all slump. EUR/JPY is near 140 and GBP/JPY has broken below Y180. We did see a major stimulus plan annouced over the weekend but if the USD corrects lower the USD/JPY will likely fall between Y117 and Y115. It would take a major stock correction to get below Y115 and the ECB QE should support the USD and stocks next week.
AUD is finally getting some love and correcting across the board against USD and NZD and EUR. I am not sure how far we can get here but AUD/USD will be a good sell near 0.8400-0.8500. AUD/NZD is back above 1.0500 but its only early days and i still think break and hold above 1.0600 is needed for shorts to start to get worried. Buying on the dip will be my play near 1.0450.
*Disclamer these are trades ideas that are short term in nature and are not to be taken as personal financial advice*