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USD resumes offered tone to start week, with EUR leading. Busy week ahead for markets. USDCAD range bound to lower near-term.

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  • COMING UP THIS WEEK: Nothing notable on tap for today, but the calendar gets busier towards the middle and end of the week with US Q3 GDP (the second look), German CPI, Janet Yellen speaking before Congress, Chinas Manufacturing PM, German employment figures, Thursdays OPEC meeting, and Fridays US ISM number. There are also half a dozen Fed speakers on tap, including Jerome Powell (the next Fed Chair).

  • CFTC COMMITMENTS OF TRADERS REPORT Will be released this afternoon because of the US holiday last week.

  • CME OPEN INTEREST CHANGES 11/24: AUD +1923, GBP +2804, CAD +340, EUR +24905, JPY -5381

  • AUDUSD:After a shaky start in Asia, the Aussie has resumed its bid tone in European trading. Were now trading above key resistance (0.7625), which is technically positive. Support now 0.7615-0.7625, then 0.7600-0.7605. Resistance 0.7650-0.7660. Its going to be another quiet week for Australian data, so traders will likely trade off the broader USD theme. We continue to believe the path of least resistance is higher in AUDUSD at the moment given positive technicals, the lack of negative Australian data points, and a broadly weaker USD trend that looks set to continue this week.

  • USDCAD:Dollar/CAD is starting the week with a negative tone as technicals weigh and cross flows add pressure (after supporting for a good part of last week). The market couldnt hold the important 1.2720 level on Friday, and were now trading below it. Were now also trading below mid-channel support (middle-blue line on chart), which invites a test of the 1.2660s, possibly even as low as the 1.2620s (trend-line extension support). Its going to be a quiet week for Canadian data until Friday, when we get Canadian Sep GDP and the Canadian employment report. Watch Stephen Poloz and deputy governor Wilkins tomorrow at 1:30pmET as they have a scheduled press conference post release of the Bank of Canadas Financial System Review (comes out twice a year). Thursday could be an interesting day too because well hear from OPEC on the much expected extension of oil production cuts into 2018. Given CADs traditional correlation with oil prices, well have to take note as this is one of the most important days every year for oil traders. This week could be volatile for USDCAD, but we continue to call it range-bound to lower for the time being.

  • EURUSD:As we thought might happen, Euro/dollar traders seized the opportunity on Friday to run the market higher as liquidity was lower than normal. Shortly after we wrote, the market blasted higher into the 1.19s and went to test the 76.4% Fibo retracement level (red line on chart). Futures traders added almost 25k contracts in new positions, which is a massive vote of confidence for EUR longs. Trade in Asia and Europe overnight has been quiet, but the 76.4% Fibo (1.1930) is acting as support. Theres not much resistance on the chart at these levels, suggesting the path of least resistance is still higher. Option traders report continued interest in upside strikes. EURUSD risk reversals are trading a multi-year highs. Even the German political drama has subsided now with talk of a new grand coalition forming in the new year.

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Erik Bregar - Trader
Exchange Bank of Canada
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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.

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