Traders await Canadian Retail Sales and CPI amid risk off tone to global markets

Summary

• USDCAD: Dollar/CAD is desperately trying to regain and hold the 1.3220s this morning, and it’s getting some help from a broad risk-off tone to markets as some US traders return for a half day session on Wall Street.  In overnight news, we had Trump call on allies to boycott China’s telecom giant Huawei.  We had weaker than expected German and Eurozone PMI data for November.  What is more, we’re seeing oil prices plunge another 5% after Saudi Arabia hinted at record production for November when its figures are released at the end of the month.  All this is combining to boost the USD broadly this morning as traders now prepare for the Canadian Retail Sales and CPI reports.  The expectations for September Retail Sales +0.1% MoM on the headline and +0.3% ex. Autos.  Markets are expecting +2.2% YoY and +0.1% MoM for October CPI.  We think USDCAD longs need a weak result here this morning so that the daily chart can repair itself further.  Otherwise, stronger than expected data could see us break support in the 1.3190s, and cause a change of trend lower into December.

• EURUSD: Euro/dollar is rolling over this morning after a third failed attempt to move above the 1.1420s was enough for traders.  The weaker PMI data was then the excuse for the stair-step move lower through the 1.1380s and then the 1.1360s.  Some buyers have stepped in at trend-line support in the 1.1330s, but the momentum is still against them at this hour.  We think the overall tone to US equities will be important today, but we remind traders that the already thin trading conditions will worsen when the cash equity markets close at 1pmET today.

• GBPUSD: Sterling is pulling back with EURUSD this morning, but traders are also citing a new risk that could make Sunday’s Brexit summit a little tricky for Theresa May.  It’s the issue of Gibraltar.  See here for more details.  GBPUSD is now trading between support in the 1.2790-1.2810s and resistance in the 1.2850-60s.  Expect volatility on the Sunday open.

• AUDUSD: The attempts to rally the Aussie have been put on hold this morning as the USD broadly trades higher on this holiday shortened session.  Chart support in the 0.7230s has now fallen, and so we’re not shaping up for a great end to the week.  Copper is slumping this morning with other commodities prices, and USDCNH firmly broken trend-line resistance in the 6.93s.  AUDUSD may very well slip lower to the next support level in the 0.7210 area should EURUSD meander near its lows and US equities fail to bounce.

• USDJPY: Dollar/yen is slipping below chart support this morning as the S&P futures trade down 20pts, but there's not much momentum behind the move.  Risk off is the theme this morning, but we have a feeling this could all get dialed back before today's early, 1pmET, close for US cash equities.

Tune in @EBCTradeDesk for more real-time market coverage.

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Charts: TWS Workspace

About the Author

Erik Bregar - Director, FX Trading

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? Contact Us or call EBC's trading desk directly at 1-888-729-9716.