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USD Broadly Offered, JPY Bid As Global Equities See Selling. Traders Watching EUR Techs.


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Summary
  • USDCAD:Dollar/CAD is breaking some technical support here in London trade. Broad USD selling commenced right after the 6am hour this morning and USDCAD is following suit. There are no major news headlines behind this move but its hard not to notice the 1.1620-25 resistance level being broken in EURUSD over the last hour (USD bearish). With support in the 1.2720s giving way, the next stop is the 1.2660s (pink line on chart this is the Aug 31 high and the bottom of our trend-line extension channel from spring 2017). Resistance now 1.2720-30, then 1.2770s (like yesterday). EURCAD and GBPCAD are mild supports this morning but their charts are still a mess. We still feel USDCAD is range-bound to lower given deteriorating technicals, cross selling, and an improving inverse correlation with rising crude oil prices (which was evident again yesterday).

  • EURUSD:As mentioned above, traders are watching the technical break higher in EURUSD over the last hour. This move invites a test of the last weeks resistance (1.1660-70 the neckline of the H&S topping pattern). We note the German DAX is taking a bit of a hit here, which is lifting Bund yields and naturally tightening the US/Bund yield spread a bit (now +196bp), which is EUR supportive. The key will be how we close out today (above or below the 1.1620-25 level). EURGBP flows are supportive so far today and EURJPY is fighting to regain the 132s. There are a few ECB speakers today (Mersch, Constancio, Lautenschlager) but other than that a very quiet calendar into weeks end.

  • GBPUSD:A bit of a whipsaw session so far in London trade with the market higher early, lower, then higher again now with the EURUSD pop. Were still in range and its getting a little tighter now. Support 1.3090-1.3100. Resistance 1.3160s. Watch for Brexit headlines today and UK data tomorrow morning at 4:30am.

  • USDJPY:Dollar/Yen bulls put up a fight yesterday, rallying the market back to 114 after option expiries yesterday, but theyre getting hit again now as a selloff in the Nikkei has led to selling of equities in Europe and the S&Ps now as we enter NY trading. So watch US equities today as the JPY reminds us of its risk-off, safe haven status. If stocks recover, expect USDJPY too as well. If not, look for the 113 level to get attacked. Resistance 113.50. Support 113.20-30. Todays option expiries: $650mln+ at 113.50, $1.7bln at 113.00.

  • NZDUSD:The RBNZ kept rates on hold last overnight at 1.75%, but in their remarks they stopped talking down the NZD and actually moved forward their projection for when inflation will hit 2%, so net/net it was a slightly hawkish rate hold. NZDUSD trying to hold gains amidst broad USD selling.

  • CME OPEN INTEREST CHANGES 11/8: AUD -1935, GBP +1119, CAD +1438, EUR +1773, JPY -21

  • S&P FUTURES -12.50, DEC GOLD +3.20, DEC CRUDE OIL +0.02

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Market Analysis Charts

USD/CAD Chart
USDCAD
EUR/USD Chart
EURUSD
GBP/USD Chart
GBPUSD
USD/JPY Chart
USDJPY
NZD/USD Chart
NZDUSD

Charts: TWS Workstation


Erik Bregar - Trader
Exchange Bank of Canada
Toronto, Ontario
Phone:647-728-4918

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Erik works with corporations and institutions to help them better navigate the currency markets. His desk provides fast, transparent, and low cost trade execution; up to the minute fundamental and technical market analysis; custom strategy development; and post-trade services -- all in an effort to add value to your firm’s bottom line. Erik has been trading currencies professionally and independently for more than 12 years. Prior to leading the trading desk at EBC, Erik was in charge of managing the foreign exchange risk for one of Canada’s largest independent broker-dealers.

Interested in creating a custom foreign exchange trading plan?  

Email: erik.bregar@ebcfx.com

Phone: 888-729-9716

 

Contributing author since 09/25/17 

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