1. Given the firming of USD STIR/ Fed funds following Yellens JH remarks and the markets hawkish reaction i still think there is another % or so of topside to be priced into USD topside.
- Fed funds implying 36% probability of a Sept hike - the highest implied prob in 3 months - hence given cables 50pip appreciation i feel theres another 100pips here to be priced at least in the fron end (tuesday/weds) of next week.
2. The 1yr MA and then the 6m highs are the next targets higher at 96.5 and 97.5 - i feel the market can move to 96.5 based on the steepening of the fed funds curve (now implying 1 hike at close to 100% for 2016 vs 70/75% previoiusly) at the front of next week but then we will need a firm NFP beat to move to the next level higher at 97.5 or 6m highs.
3. Dollar index aside, gbpusd is my favourite expression of long USD aside from DXY - profit target of 1.300/5.