Mar 21st 2016: Euro Gaps Higher

• This morning, markets are still finding their feet as we start the new week. The general early theme is of dollar resilience and euro stability. The dollar index is nudging higher after a week of heavy selling last week.

• At the same times, the euro is showing some out-performance, especially against the British pound.

• Commodity currencies are struggling after a generally positive week with oil prices having breached the $40 marker with some gusto. The AUD/ USD and NZD/ USD are pulling back, while the USD/ CAD gaps higher.

• After gapping lower to test the lows of the trading range, the USD/ JPY is nudging higher slightly in line with the stronger dollar.

Coming up today: 

• At midday we get Canadian core CPI and retail sales.
• This is followed by FOMC member Dudley speaking at 13.00.
• US preliminary UoM consumer sentiment follows at 14.00.
• From 15.00 we have further Fed speak with FOMC member Rosengren and Bullard speaking at 18.00.

Trade Idea: 

• The Australian dollar has pulled back over the last couple of days, but momentum generally remains bullish. It’s been a case of ‘no news is good news’ on China, while the dollar rally is still in its early days.

• A good way to play this is a HIGHER trade predicting that the AUD/ USD will close above 0.7600 in 21 days for a potential return of 167%.

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