• Financial Institutions
  • Corporations
  • Travelers
  • Foreign Bank Note Exchange
  • International Drafts
  • International Wire Transfers
  • Global EFT
  • Foreign Check Clearing
  • Foreign Draft Issuance
  • Travel
  • Technology Companies
  • Payroll
  • Healthcare
  • Nonprofit
  • Partnerships

$AUD weak. $GBP bid. $CAD testing key levels. BOC decision 10amET

CXI October 25th, 2017


  • AUD weaker on lower than expected Australian CPI, technicals weigh

  • GBP bid across the board on higher than expected UK GDP (QoQ), but GBPUSD still in range

  • EUR marking time ahead of the ECB tomorrow.  EURJPY flows supportive.

  • CAD follows AUD weaker overnight.  Bank of Canada rate decision on deck 10amET.  USDCAD tested key technical resistance as we speak in the mid 1.27s and has since backed off.

  • US yields trade to new swing highs overnight (2.45+), but USDJPY is starting to stall a bit.  Talk of option barrier at 114.50 still making the rounds.

  • US durable goods For Sep come in +2.2%, better than expected

  • CME open interest changes 10/24: AUD -1428, GBP +4602, CAD -2344, EUR +1840, JPY +7924

Currency Calendar

Date Releases / Holiday Entity
October 25, 2017  BoC Monetary Policy Report CAD
October 25, 2017  BoC Interest Rate Decision CAD
October 25, 2017  BoC Rate Statement CAD
October 25, 2017  BoC Press Conference CAD

Bank holidays and impactful report releases for select countries.

By The Numbers: Daily FX Snapshot

AUD/USD - Australian Dollar

Australian Q3 CPI comes in at +1.8% overnight (lower than expected).  Aussie getting sold hard across the board as this potentially takes a 2018 rate hike off the table for the RBA.  AUDUSD has sliced through yesterday’s support level (0.7770s) and is now testing the 50% Fibo retracement of the rally from the May low to the September high (orange line on chart).  Next support at the bottom of the downward daily channel (0.7650s).  Upward sloping weekly trend line from Jan 2016 comes in just below the 76 figure.  AUDNZD, while weaker, is still holding yesterday’s low.  AUDCAD looks poised to test the downward trend line it broke out from on Oct 13th, which would see it trade lower still into the 0.9730-50s.


USD/CAD - Canadian Dollar

CAD takes its cue from AUD for the second overnight session in a row as the market awaits the Bank of Canada rate decision and Monetary Policy Report later this morning.  Market technicals are still supportive, and as we mentioned a few times over the last week, significant resistance doesn’t really kick in until the mid to high 1.27s.  Odds are at this point that we will not get a rate hike.  We will be watching very closely to see how the market responds to overhead resistance after the announcement (a break above would invite further gains into the 1.29s, whereas failure at the levels could see some near term selling come in.  Today’s option expiry at 1.2700, with over $800mln USD going off, will make things interesting as well.  EURCAD flows are supportive for the second day in a row.  GBPCAD has surged higher in London trade, led by GBPUSD, as the inverted head & shoulders pattern starts to play out.  This cross could be touch the 1.70 very easily now if the Bank of Canada announcement and outlook comes in dovish.


EUR/USD - European Central Bank Euro

Euro/dollar traders continue to mark time ahead of ECB policy announcement tomorrow morning (headlines will cross at 7:45amET and the press conference follows at 8:30).  The German IFO survey comes in at record high of 116.70 and USDJPY continues to chase US yields higher, lifting EURJPY in the process (all this is supportive EUR right now).  Over 3bln EUR in option expiries today (1.17-1.18) almost ensures it’s going to be a sleeper today.  EURGBP has a large option expiry too at 0.8875.  The consensus view for tomorrow is a reduction in bond purchases to 25-30bln EUR/month with a 9-month extension of the QE program.  Reuters reporting a large bearish play in EURUSD via options overnight (someone sold premium at 1.20 and bought premium at 1.16).  As always, we’ll watch the market’s reaction to key technical levels tomorrow.  With the head & shoulders topping pattern now getting plenty of air time and with the bearish tilt to forecasts coming out for tomorrow, we would not be surprised to see a kneejerk spike higher initially just to shake some players out.  Support in the high 1.16s.  Downward daily channel resistance is in the low 1.18s.  The 1.1890s is also a key level (if we spike above and hold, the H&S top pattern is erased).


GBP/USD - British Pound

UK Q3 GDP comes in at +1.5% yoy and +0.4% quarter over quarter (one tenth higher than expected) earlier this morning and the GBP bulls are loving it.  Unfortunately, we’re still trading in the new range we defined last Friday (1.31-1.33).  Upward momentum should remain so long as GBPUSD holds the 1.3220s.  Cross flows are supportive.  EURGBP is giving back all of yesterday’s bounce and is testing the high 0.88s yet again (how many times can it hold?).  GBPJPY has broken out to the upside, clearing Monday’s high by 75pts, and is very much looking like it’s going to trend higher again now (especially with USDJPY at its back).  Odds for a rate hike from the BOE next Thursday (Nov 2) have risen back to 80%.

Market Analysis Charts





Charts: TWS Workspace

About the Author

Erik Bregar

Erik Bregar - Trader


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?

About Exchange Bank of Canada
Exchange Bank of Canada (EBC) is a Schedule 1 bank based in Toronto, Canada. EBC specializes in foreign exchange services and international payments providing a wide range of services to financial institutions and corporations, including banknote foreign currency exchange, travelers' cheques, foreign currency cheque clearing, foreign currency bank drafts, Global EFT and international wire transfers through the use of EBC's innovative EBCFX web-based FX software www.ebcfx.com.

Disclaimer: All product names, logos, and brands are property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, logos, and brands does not imply endorsement.

This publication has been prepared by Exchange Bank of Canada for informational and marketing purposes only. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable, but no representation or warranty, express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as a representation for which Exchange Bank of Canada, its affiliates or any of their employees incur any responsibility. Neither Exchange Bank of Canada nor its affiliates accept any liability whatsoever for any loss arising from any use of this information. This publication is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any of the currencies referred to herein, nor shall this publication be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The general transaction, financial, educational and market information contained herein is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a "call to action" or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. You should note that the manner in which you implement any of the strategies set out in this publication may expose you to significant risk and you should carefully consider your ability to bear such risks through consultation with your own independent financial, legal, accounting, tax and other professional advisors. All Exchange Bank of Canada products and services are subject to the terms of applicable agreements and local regulations. This publication and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced in whole or in part, or referred to in any manner whatsoever nor may the information, opinions and conclusions contained in it be referred to without the prior express written consent of Exchange Bank of Canada.