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EUR Traders Take Profit. Global Equities & USDJPY Recover. CAD Traders Watching Cross Flows, Cdn CPI In Focus Tomorrow.


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Summary
  • ECONOMIC DATA HIGHLIGHTS IN THE LAST 24HRS: US CPI comes in at +2.0% as expected. US Retail Sales beats consensus by +0.2%. The Australian employment report was a mixed bag (weaker than expected gain in the total number of jobs, but solid gains in full time jobs + the Sep report was revised higher). UK Retail sales came in +0.1% MoM, slightly higher than the flat consensus view. On deck for the US session: Cdn Manufacturing Sales, US Phily Fed survey (24.1 expected), US Industrial Production (+0.5% MoM expected).

  • UPCOMING CENTRAL BANK SPEAK: A bunch of BOE members including Governor Carney will be speaking at 9amET. Feds Kaplan speaking at 1pm. ECBs Constancio at 3pm. Feds Brainard at 4pm. ECBs Draghi speaks in Frankfurt at 3:30am tomorrow.

  • CME OPEN INTEREST CHANGES 11/15: AUD +2474, GBP -2380, CAD -407, EUR +2808, JPY -6038

  • AUDUSD: Traders were hoping the Australian employment last night would help the market decide what to do at the key support level it tested yesterday (0.7600). Instead, a mixed result has left traders in a bit of limbo, and so weve barely moved from the NY close. Technically speaking, the market is still in a downtrend. Were below the lower bound of our downward channel, were well below the 61.8% Fibo, and were a few points below the key upward sloping trend line going back to Jan 2016 (see chart). The market needs to regain the 0.7620 soon, or we expect the low 75s to be tested.

  • USDCAD: Theres not much going on with CAD since the NY close. The market tested near-term resistance yesterday in the 1.2770s as we expected, and traders are now looking for further catalysts. Cdn existing home sales and the speech from BOC Wilkens last night were non-events. The slight bid to oil prices yesterday also had no effect. With every hour that passes without meaningful selling, this market grows stronger technically. As we mentioned yesterday, we now see USDCAD range-bound to higher with cross flows seemingly being the greatest influence lately. EURCAD may cap things a bit today as traders continue to take profits after the recent run up (see chart), but GBPCAD is slowly marching higher, now looking a lot more comfortable above the 1.68 level. Should the 1.2770s give way in USDCAD, expect a test of 1.2800. Support today lies in the 1.2740s, then 1.2710.

  • EURUSD: Looks like we finally some profit taking yesterday in EUR. A slightly stronger than expected print for US Retail sales and the market hitting technical resistance in the 1.1860s around the same time as that news release is all it took. We then saw continued profit taking on EUR crosses too as the day wore on. EURGBP traded back down into the low 89s and EURJPY backed off into the low 133s. While were not surprised by yesterdays action (EUR longs have hung in there despite losses from the dovish ECB taper; theyve added to positions; and were probably finally back in the black or make money again), were a little concerned about the swiftness of the selloff from the highs (grave-stone doji candle on the daily chart). The pattern suggests a near-term halt to the recent rally and some range-trading ahead. Massive EURUSD option expiries today add to that thesis. We have over 2bln EUR notional in options going off this morning between 1.1770-1.1800.

  • GBPUSD: Sterling continues to chop around, but traders are buying on dips. Market is now testing resistance again at the 1.3190-1.3200 level. Watch for headlines from these BOE speakers shortly after 9am. A strong close above 1.32 (1.3230 would be better) would do much to improve the markets technical structure. Support today lies at 1.3150, then the 1.3120-30 area.

  • USDJPY: US stocks snapped back again yesterday along with US yields and profit taking in EUR, and that has saved USDJPY near term. A strong rally in the Nikkei overnight has led to buying of equities in Europe once again, and we have the S&P futures up 10pts pre-market, so the trend has continued into the NY open. At its worst yesterday, USDJPY tested key support at the 112.50 and it bounced swiftly (which was positive). We now sit back above the psychologically important 113 level. The 113.30s should cap for today. The 112.70-80 is support. Expect a little range-bound action here as well today as the market works off a bunch of option expiries as well.

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

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About the author


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?  

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