USD starts the week with quiet bid
Erik Bregar of Exchange Bank of Canada - InsideFutures.com - Mon Feb 11, 8:16AM CST
Summary
  • USDCAD:Dollar/CAD sits trapped with the 1.3260s to 1.3280s this morning as the broader USD opens quietly bid to start the week. Fridays Canadian employment report was absolutely stellar, but sellers failed to keep the market below chart support in the 1.3260s for very long. We think this bodes well for USDCAD here as the market now toys with breaking the downward trend thats been in place since the beginning of January, but wed need to see a firm break above the 1.3320s to confirm. Todays calendar is very quiet, which will likely leave traders eyeing chart levels, the broader USD and oil prices as usual. Tomorrow brings OPECs monthly oil report and a speech from Fed chairman Powell at the Hope Enterprise Rural Policy Forum. Wednesday sees the release of the US CPI figures for January. Thursday features US Retail Sales and the Canadian Manufacturing Shipments data; both for the month of December. Finally on Friday well get the US Industrial Production figures for January.

  • EURUSD:Euro/dollar just cant catch a break here as traders push the market down for the 6th session in a row today. Fridays attempt to regain support in the 1.1340s fizzled just as quickly as Thursdays attempt, and with that came a pretty lackluster NY closing pattern. The Chinese markets re-opened today after the week long Lunar New Year holidays and rallied USDCNH confidently back above the 6.78s, which we said on Friday was noteworthy for EURUSD (because of strong inverse correlation). Low level trade talks between the US and China are set to resume this week, and so we think the Yuan warrants some attention here once again. The European calendar this week features the Eurozone December Industrial Production figures on Wednesday, followed by Germanys Q4 2018 GDP figures on Thursday. Italian bonds have caught a bit of a bid this morning (tightening up the BTP/Bund spread a little), but its not doing much to support EURUSD here. We think the sellers remain in control sub 1.1340.

  • GBPUSD:Sterling is falling lower this morning, after Fridays late slip back below the 1.2940s gave sellers some confidence to reenter. Adding to the markets woes this morning was a sea of weaker than expected UK economic data. The December Manufacturing/Industrial Production data, Q4 GDP, and the December Trade Balance all printed worse than estimates, and so GBP sellers have had plenty to stew on here today. Near term chart support today comes in at the 1.2890s, then the post BoE spike lows in the 1.2850s. The latest Brexit headlines suggest that while debate on the topic will resume in parliament this Thursday, there are no important votes scheduled. Theresa May is expected to make a Brexit statement tomorrow. We think GBPUSD will continue to trade on the defensive so long as we stay below 1.2950.

  • AUDUSD:The Aussie managed to hold chart support at the 0.7080-90s going into the weekend, but bid tone to USDCNH this morning (weaker open for the Chinese yuan this week) is not doing the market any favors. Copper prices are continuing Fridays pullback of their 2.85 swing highs, which doesnt help here in our opinion. Continued weakness below 0.7080-90 now invites a possible move down to the 0.7000 mark should the market not recover quickly here. This weeks Australian calendar features the January NAB Survey (out tonight at 7:30pmET) and the Westpac Consumer Confidence Survey (out tomorrow night at 6:30pmET).

  • USDJPY:Dollar/yen has resumed its upward climb today as European equities and the S&P futures trade with a broad risk-on tone. White House advisor Conway has just said IT LOOKS LIKE THE US & CHINA ARE GETTING CLOSER TO A TRADE DEAL on Fox News, and with that the S&Ps and USDJPY are making new highs on the session. We think the markets move above the 109.50-110.00 range now invites further buying into the 110.50s but, as is normally the case, the momentum will need to come from rising US stocks and US bond yields. Wed watch 2700-2710 as key support in the S&Ps, and the 2.63 level in US 10yr yields. Japanese markets were closed today for the National Foundation Day holiday.

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MARKET ANALYSIS CHARTS

USD/CAD DAILY CHART

USD/CAD HOURLY CHART

MARCH CRUDE OIL DAILY CHART

EUR/USD DAILY CHART

EUR/USD HOURLY CHART

USD/CNH DAILY CHART

GBP/USD DAILY CHART

GBP/USD HOURLY CHART

EUR/GBP DAILY CHART

AUD/USD DAILY CHART

AUD/USD HOURLY CHART

MARCH COPPER DAILY CHART

USD/JPY DAILY CHART

USD/JPY HOURLY CHART

MARCH S&P DAILY CHART

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Erik Bregar - Director, FX Trading
Exchange Bank of Canada
Toronto, Ontario
Email:erik.bregar@ebcfx.com
Phone:888-729-9716

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