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USD Erases Gains after FED Minutes

The anticipated FED minutes were released today, and has caused a bearish reaction to the USD.
The main take away from the meeting, was as follows
Most participants anticipated that, based on their assessment of the current economic situation and their outlook for economic activity, the labor market, and inflation, these condiitions could well be met by the time of the next meeting.

Essentially, confirming the rate hike. Sounds quite good for the USD
So why the sell off? This is the essence of …
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Notable Currencies of the week

This weeks was essentially a sideways market for the most part if glancing at the daily charts. But the mostly sideways movements in the majority of the pairs clearly points to a few currencies that boldly stand out.
GBP - The pair was sold off quite aggressively in the previous week, but has made one of the strongest rebounds. The theme of the previous week was that the UK would not be looking to raise rates as soon as the market previously anticipated, but sense prevails as the economy stil
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Bad Data + USD Strength = Strong Positioning

The US saw negative numbers released today, yet we saw the USD rally. The numbers were not just marginally bad, they were really bad. significant deviations from expectations across the board.
Often it's during news releases that we get a strong indication of where exactly the major players are positioning. Often, by careful analysis we can see that a currency should have sold off slightly more, or that a rally should have lasted a bit longer, but small signs of what the big players views on the…
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Yellen's Welcome Speech - No "Heads Up"

The USD Bulls may have been anticipating today, as a catalyst to buy USD.
However, the fundamentals gave them no reason to do so. First up was Unemployment Claims, which came in at a slight miss (276 vs 270) & then Yellen's welcome speech
There may have been some anticipation that Yellen would provide further confirmation that there would be a December rate hike, or acknowledge that the data has been coming in well. The lack of such may have been the catalyst for a spike down in the US Dollar as
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USD Struggling to hold on to gains

The USD started the NY session off with a vengeance taking out new lows in EURUSD. But as the London session closed, we've seen the EURUSD start to give back it's gains.
It seems clear that the USD is in an uptrend. However, the chances of some type of short squeeze seems likely as we see net shorts increase two week in a row already as of last Tuesdays report. It is very likely this number gained even further this past week with the fundamental events that have occurred.
According to COT Report…
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USD Catching a strong bid at NY Open

The USD remains strong to start the week as New York bid up the Dollar strong at the open.
According to Bloomberg the market is now pricing in a 70-75% chance of a rate hike at the December meeting.
USDCAD has been quite strong, the chart below shows it trading within a 1H Channel up, which offers some potentially low risk entries to climb on the USD Bull train.
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End of Week Currency Fundamental Summary

The past week was filled with Fundamental data releases. Here is a summary which may assist in finding trading opportunities in the week to come.
NZD - The early week employment release for New Zealand saw the pair miss in data yet once again. It is quite clear that the labor sector is struggling. We have already seen a larger reversal in several NZD pairs a few weeks back after some temporary strength. At the moment, the single currency may be considered oversold, but any rallies can be expecte
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NFP Numbers contribute to divergent monetary policy outlook

The numbers coming out of the United States were nothing short of fantastic.
Unlike any previous release, dynamics have changed in the markets.
For a large part of the week, the US Dollar was receiving a strong bid. There was some contributing factors such as negative data out of NZD and GBP, and the markets still considering the negative view point of the EURO where the ECB is seriously considering further QE..
The negative outlooks on several economies, combined with positive data out of the U
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Strong CPI Data - USD Strength or time to Fade?

Month over Month Core CPI came in at 0.3% versus a forecast of 0.2%. And has caused a boost for the USD in early New York Trading. CPI is an important event from the Inflation data set, as current inflation levels are too low, an issue central bankers are facing globally.
So can this spur new buying into the USD? Is the downtrend finally over and time to start buying again?
Perhaps not the case. Previously this week we saw some mixed reaction off the release of the FOMC minutes. Headlines were s…
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Outlook for March

The USD mostly consolidated in the month of February, and failed to make new highs. The same can be said for the EURUSD.
Fundamentals have shifted a bit, with a focus on inflation in recent guidance from the FED. But the markets quickly dismissed it after a good CPI reading, which has left the Dollar Index to close at monthly highs once again.
There will need to be some form of a catalyst to drive the USD higher, and thus until such break occurs Dollar shorts may be the obvious trade.
The Curren…
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