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US jobs report in focus. BOJ goes full throttle on yield curve control. Stocks under pressure.

CXI February 2nd, 2018


  • USDCAD: The January US jobs report is the focus for FX traders this morning, and the market consensus is for a gain of 180k jobs and an increase of 0.3% MoM (2.6% YoY) in average hourly earnings.  The broader USD is seeing some short covering ahead of these numbers, and USDCAD is benefiting as a result.  Despite a poor NY close yesterday, we’re now trading back above familiar, downward sloping, trend-line support (which today checks in at 1.23 even).  This is mildly positive as it puts the 1.2330s back in focus, from a technical perspective.  A strong US jobs report would very likely put trend-line resistance at 1.2360-1.2370 to the test.  A weak report would very likely see the market lose 1.23 once again and attack 1.2250. 

  • AUDUSD: The Aussie is having a very rough overnight session, despite a strong late day turn-around back above 0.8030-0.8040 yesterday.  It’s a broad USD-led move, more than anything AUD related in our opinion.  While we don’t think the party is over completely for bulls, there seems to be some angst in the market ahead of the US jobs report (which could beat expectations...if Wednesday’s ADP was any indication) and the RBA interest rate announcement on Tuesday (which will likely be dovish, according to a Reuters poll)...all that would be AUDUSD bearish.  The market has currently lost trend-line support at 0.8000 by about 10pts.  A beat on US jobs will likely see the market extend losses to the 0.7940-0.7950 area.  A poor US jobs report would likely see the market revisit 0.8030-0.8040.  Copper is back to UNCH as an attempt higher earlier in London trading got smacked down at trend-line resistance (3.24).

  • EURUSD: The Euro has had a quiet overnight session as traders await the main event of the day today.  Yesterday’s close was as bullish as it could be (closing above 1.2500 and near the swing high).  USDCNH tried to punch lower overnight after the PBOC fix, but it managed to hold the 6.28 level and regain the 6.29s in fact.  This can sort of explain EURUSD softness as well, however USDCNH is still stuck in a pronounced downtrend.  We feel only a move above 6.31 would have us question EUR strength at this point.  EURJPY continues to be a star, rallying over 200pts this week.  It’s running into a bit of trend-line resistance here though (137.20).  EURGBP has recovered smartly back above the 0.8770s, the level it smashed below late Wed/early Thurs.  It will very likely be a big day for markets considering how bullish the positioning is for EURUSD going into these numbers.

  • GBPUSD: Sterling is mildly softer in overnight trade as well as traders await the US jobs report.  The NY close was good, from a technical perspective, as we closed above 1.4250 and near the swing highs (like EURUSD), and the overnight pullback hasn’t threatened bulls all that much (new trend-line support at 1.4220 is holding).  It could be a big day here for GBPUSD as well, considering there’s still very little overhead resistance in this market.  Trend-line support today checks in at 1.4120-1.4130.

  • USDJPY: The big news overnight out of Japan was a headline from the BOJ during their daily JGB buying operation, where the central bank said it was going to buy unlimited amounts of JGBs at 0.11%.  Some traders are laughing saying this is evidence the BOJ has lost control of monetary policy.  USDJPY traders didn’t want to stand in the way for the time being though, and bid the market up as a result (as talk of yet more QE is fundamentally bearish JPY).  With that, USDJPY has broken trend-line resistance in the 109.60-70s, and now looks poised to test 110.00-110.20.  The US jobs report is up next at 8:30amET.  Global equities are under pressure this morning, but we’re not seeing any “risk-off” JPY flows at the moment.


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Erik Bregar

Erik Bregar - Director, FX Trading


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