USD breaks out of bullish wedge pattern

Last week I looked at buying the USD index at 93.20 for a move through the bullish wedge pattern.

Source: Bloomberg

This has worked well so far and I am happy to stay with the idea, moving the stop loss to break even. The USD is the most important asset right now, so continue watching this like a hawk.

It’s also very interesting to see that the implied probability of a rate hike from the Federal Reserve has actually fallen, but the USD has risen for six days. This has therefore been a pure exercise in positioning, with the market running its largest net short position in the USD for many years (source: weekly Commitment of Traders report).

It's worth also keeping USD/CNH on the radar as this is starting to move, and weakness in the Chinese yuan could be a big negative for equity markets and commodities.

Click to enlarge

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.