Catalonia defers independence. $EUR holding bid. Broader $USD mixed. FOMC minutes today.
Summary
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Catalonia ended up being the focus of yesterday’s trade as Puigdemont does not declare independence from Spain, but instead defers it. The news is supportive of EUR but markets had already priced this in during London trading and the options market was never worried about it.
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The broader USD chopped around overnight on an otherwise quiet data calendar. Minutes of the Sep 20 FOMC meeting are the focus today (released at 2pmET). USDCNH bounces in European trade.
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Options market showing renewed interest in EURUSD topside calls, USDJPY downside puts and a lack of interest in AUDUSD puts (all a little bearish USD). USDCAD has $700mln USD of options at the 1.2500 expiring tomorrow at 10amET.
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CME open interest changes 10/10: AUD -1781, GBP +1132, CAD +521, EUR +8510, JPY +3710
Currency Calendar
Date | Releases / Holiday | Entity |
---|---|---|
October 11, 2017 | FOMC Minutes | USA |
Bank holidays and impactful report releases for select countries.
By The Numbers: Daily FX Snapshot
USD/CAD - Canadian Dollar
Dollar/CAD continues to waffle around the 1.25 handle as there is not much to trade on other than the broader USD theme, which is mildly bearish at the moment. Friday’s failure to breach the 1.2600 level is negative technically, but the daily uptrend is still intact and Friday’s COT report showed a market that is still holding on to USD short positions. Thursday’s option expiry (see above) may likely contain action further. Option traders showing no excitement whatsoever since Poloz last spoke. Support 1.2490s today. Market needs to clear 1.2530-60 to resume upward momentum. EURCAD and GBPCAD flows have been supportive so far this week. Watching a descending triangle formation on the EURCAD weekly chart (would be bearish CAD if resolved to the upside).
EUR/USD - European Central Bank Euro
Buying the dip in EUR (which is what recent longs did according to the latest COT report released on Friday) appears to have been the right move over the last week as the market was never really convinced Catalonia would leave Spain. The market is now testing weekly resistance in the 1.1830-60s. Support today at 1.1780-90. Traders watching Spain’s response now (article 155 suspension of Catalan autonomy or further talks). Dip buying in EURGBP, after last week’s stale at 0.8990, is helping as well. We also continue to watch the Chinese Yuan, which has been correlating well with EUR of late.
GBP/USD - British Pound
Sterling enters NY trading today slightly weaker, but still well off Friday’s low as the market is focusing more and more on the recent upward correction to some UK inflation data (which adds more fuel to the BOE rate hike argument). Resistance 1.3220-50. Support 1.3150-60. Damage to the weekly chart would be undone if we can rally back above 1.33. Option traders still favoring the downside (negative 1-month risk reversals). GBPJPY continues to hold the weekly support level we mentioned last week.
Market Analysis Charts
USD/CAD Chart
EUR/USD Chart
GBP/USD Chart
Charts: TWS Workstation
About the Author

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.