The EUR/USD was unable to hold above 1.15, USD/CAD regained 1.30, and Bitcoin began to form a dangerous descending triangle against the $6000 level.
Ahead of the all-important CPI numbers in the United States later this week, the core data (changes in prices of goods and services excluding energy) points to yet another increase.
This is what the Fed likes to see in the midst of a double tightening cycle: raising federal fund rates and a shrinking balance sheet. It puts the Fed on course for a fourth rate hike in December, further fueling US dollar bulls.
Relative ranges are continuing to hold but it seems as though the US dollar is building energy for another jump. The trigger could be the crypto-market.
The danger is that retail traders are positioned on the long side.
With market forces trying to balance on a sub-$6000 move, retail traders will suffer. The spillover should bring higher USD/JPY due to equity flows, and a break of recent ranges on other major pairs.
The market's reaction to last week’s NFP numbers was confusing, but fairly typical for the start of a new month.
Make no mistake, we’re in for a wild run into the last quarter of the year. All eyes should be on the $6000 Bitcoin level. It may be the trigger for a spike in financial markets’ volatility.