• 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

$USD bid on positioning, UK PMI miss and Catalan news $EUR $GBP

CXI October 2nd, 2017


  • USD starts the week with a strong contrarian bid tone as data from CFTC and CME last week confirm aggregate USD short position now largest since 2012.  Negative Spanish headlines (90% of Catalans voted for independence) keeping EUR offered.  Higher US yields, weaker PM prices pressuring JPY.  GBP breaks lower on weak UK manufacturing PMI.

  • CFTC COT Report 9/26: AUD: Net Long 77.2K (+4.6K), GBP: Net long 5K (+15.2K), CAD: Net Long +74.6K (+15.7K), EUR Net Long 88.1K (+25.4K), JPY Net Short -71.3K (-20k).

  • Takeaways from Friday’s COT Report: GBP longs continued to add positions post BOE, but even more shorts have been using dips to liquidate positions, market now net long for the first time since late 2015. The EUR’s September’s toping pattern and recent drop was led more by new short positions but they’re now starting to cover.  CAD and AUD longs continued to take heat post FOMC and with recent shorts liquidating, the net long position is starting to look extended (fresh multi-year high for CAD).  JPY shorts are clearly back in control, using the recent rally (dip in USDJPY) to add to positions.

  • CME open interest changes 9/29: AUD -2371, GBP -5680, CAD +514, EUR +3352, JPY +10837

  • October 20yr Seasonals: AUD +0.8%, GBP +0.3%, CAD -0.2%, EUR -0.5%, JPY +0.8%.

  • Upcoming data this week:  Cdn PMI, US ISM for Monday; Aussie rate decision for Tuesday night (11:30pmET); European services PMIs, US non-manufacturing ISM and Yellen speaking on Wednesday; ECB meets Thursday;  Cdn and US jobs numbers on Friday.

  • A reminder China is closed this week for Golden Week.  19th National Congress of the Communist Party (held every 5 years) starts Oct 18.

Currency Calendar

Date Releases / Holiday Entity
October 2, 2017 ISM Manufacturing PMI (Sep) USA
October 2, 2017 ISM Prices Paid (Sep) USA

Bank holidays and impactful report releases for select countries.

By The Numbers: Daily FX Snapshot

USD/CAD - Canadian Dollar

Market starts the week on a better-footing technically with spot back at the 1.2520s, a level that failed twice on Thursday and Friday to give way to buyers.  With not much in the way of CAD-specific data this week until Friday’s Cdn job numbers, CAD should take its cue from the broader USD tone…and possibly AUD given recent price and position correlations.  Light support 1.2450s.  Friday NY high 1.2532.  Not much in the way of resistance above until the high 1.26s.  Positioning could be a bullish for USDCAD here as the market is now net short more USD (net long more CAD) than it was at the September lows.


EUR/USD - European Central Bank Euro

With option expiries out of the way and the Catalan referendum news coming in more negative than expected, the market has found an excuse to trade lower.  Interesting to note the market was accumulating positions steadily Wed through Fri last week with open interest up over 8k (dip buyers?).  Light support at last week’s lows (1.1720s).  Next support levels in the mid to high 1.16s.  Market needs to clear Friday’s high to reverse the negative momentum.  Watch EURJPY.  After steadying last week and attempting to regain recent losses, the market has quickly traded back down to 132.30s, a break of which could lead to further losses for EUR across the board.


GBP/USD - British Pound

After trying to bottom for the last week, Sterling has given up the 1.3340-60 level on the weak UK data today and is now struggling to find support.  With not much in the way of obvious support levels because of the extremely wide post BOE ranges, traders are drawing Fibonacci retracements on the charts this morning and looking at GBP crosses for clues.  EURGBP successfully tested the 0.8800 level, this time from above.  GBPJPY looks set to test last week’s range low (149.75)…both GBP bearish.  Market still needs to regain the 1.3420s and hold before any positive momentum returns.

Market Analysis Charts





Charts: TWS Workstation

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.