USD range trades amid lack of headlines. USDJPY fails to benefit from surge is US yields yesterday. AUD traders eyeing Australian CPI tonight.

Summary

• USDCAD: Dollar/CAD is trading with a mixed tone this morning after a lackluster NY session yesterday that saw prices inch up as crude oil prices backed off the $69 handle.  Sellers were found as expected on the move into resistance at 1.3160-80, and we’re now trading lower this morning as the USD sees some broad selling in Europe.  Aside from the US Markit PMIs for July, there’s very little in the way of scheduled items on the docket today.  We think USDCAD drifts in a range-bound pattern today.  Support checks in at the familiar 1.3120s.  September crude oil has bounced off support in the 67.60s and is now trading $0.50 higher.  Oil inventories are expected to drop 3.16M barrels in tomorrows’ weekly EIA report.

• EURUSD: Euro/dollar is up marginally today, and off its European lows.  Another rally in USDCNH overnight (due to a higher USDCNY fix) was the culprit behind early EUR weakness but stronger than expected manufacturing PMI data out of Europe today helped the common currency recover.  Expect the range trade to continue for the time being as the calendar remains light and the technicals converge.  Support is 1.1690, then 1.1650.  Resistance is 1.1720-40.  About 1blnEUR in options expire today at the 1.1665 strike.  A further 1bln go off the board at the 1.1700 strike following the ECB meeting on Thursday.

• GBPUSD:Sterling is trading with an upward vibe this morning after slipping lower for most of yesterday and into early European trade today.  There’s not much we can point to explaining the rebound other than the bounce higher in EURUSD.  Comments from the BoE’s Broadbent yesterday were largely a non-event for markets, but here’s what he said: https://www.reuters.com/article/us-britain-boe-broadbent/reversing-quantitative-easing-would-not-be-hawkish-signal-says-boes-broadbent-idUSKBN1KD26M.  With GBPUSD now narrowly back above the 1.3125 trend-line level and EURGBP challenging support in the low 0.89s, we think the odds of a resumption in the GBP rally increases.  However, there is not much momentum behind the broad USD weakness at this hour.

• AUDUSD: The Aussie is also off its overnight lows and trading higher this morning, following EURUSD again for the most part.  Copper is up 1.3% on supply concerns (finally breaking above the 2.7750 level) and gold is up marginally as well, which is AUDUSD supportive.  Tonight features Australian Q2 CPI at 9:30pmET.  Traders are expecting +2.2% YoY and +0.5% QoQ.  Seeing as the market is trading back above 0.7400 once again, we think there’s scope for a rally to the 0.7430-40 area, but another wave of broad USD selling is needed today in our opinion.  A stronger than expected CPI print tonight would likely see traders rush to fill the July 11^th opening gap in the 0.7450s on route to a test of the next chart resistance zone in the 0.7470-80s.

• USDJPY:Dollar/yen is struggling today after yesterday’s inverted hammer close lacked upside momentum (close was just barely above trend-line support in the 111.40s).  Yesterday’s inability for the market to bounce more (considering the huge upward move in US yields) is also a bit disconcerting.  Rumors continue to swirl next Tuesday’s BOJ meeting will feature an adjustment to the Japanese central bank’s yield curve control policy, and some broad USD selling in Europe post the PMI data is not helping.  More here: https://www.ft.com/content/cdf1f026-8e2e-11e8-b639-7680cedcc421.  We think USDJPY remains on the defensive so long as the market stays below 111.40-50.  Next support is 110.50.

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

Market Analysis Charts

USD/CAD Daily Chart

USD/CAD Hourly Chart

September Crude Oil Daily

EUR/USD Daily Chart

EUR/USD Hourly Chart

USD/CNH Daily Chart

GBP/USD Daily Chart

GBP/USD Hourly Chart

EUR/GBP Daily Chart

AUD/USD Daily Chart

AUD/USD Hourly Chart

September Copper Daily

USD/JPY Daily Chart

USD/JPY Hourly Chart

EUR/JPY Daily Chart

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.

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