• Financial Institutions
  • Corporations
  • Travelers
  • SOLUTIONS
  • Foreign Bank Note Exchange
  • International Drafts
  • International Wire Transfers
  • Global EFT
  • Foreign Check Clearing
  • Foreign Draft Issuance
  • INDUSTRIES
  • Travel
  • Technology Companies
  • Payroll
  • Healthcare
  • Nonprofit
  • Partnerships

USDCAD offered on bounce in US stocks + another positive NAFTA headline. Support levels, weak seasonals in focus. Big reports out Friday.

CXI April 3rd, 2018

Summary

  • USDCAD: It was a volatile Easter Monday session yesterday, with FX traders focused on the stock market for the most part.  China retaliated against the US with plans to impose tariffs on 128 US products.  Trump continued to go after Amazon.com.  US ISM came in below expectations, while the prices paid sub-component came in above expectations.  Liquidity was also at premium with Europe still out on holidays.  All this helped to fuel a swift sell off in stocks, which in turn brought a “risk off, safe-haven” type bid to the USD more broadly.  USDCAD bottomed at the 1.2870s once again and rallied all the way back up to familiar resistance in the 1.2920s.  Another attempt was made to push above resistance late in the session, but this failed as the S&Ps bounced 30pts off its lows and Trump came out with a NAFTA positive headline (wants to see a deal in 2 weeks).  This led to a lackluster NY close for USDCAD and gave traders an excuse to push the market lower overnight.  The move back lower overnight initially coincided with moves higher in AUDUSD, EURUSD and GBPUSD, but over the last few hours has been more a result of cross selling in EURCAD and GBPCAD.  Either way, we’re right back at the 1.2870s, which will once again be key level to watch for USDCAD today.  Next chart support is 1.2845-50, then 1.2810-15.  It’s going to be a quiet session ahead today for scheduled data releases, with just a couple of Fed speakers (Kashkari and Brainard), and so USDCAD traders will likely be focused on the stock market again and the broader USD tone.  Tomorrow sees the release of March US services ISM and US ADP employment reports.  Thursday brings the US Trade Balance for February.  And then of course we have the main event on Friday: the March employment reports for both the US and Canada.  There was a little hype making the rounds yesterday about the CFTC’s latest COT report and what it said for CAD futures positioning.  As of March 27, the market flipped to a net long USD (net short CAD) position for the first time since the summer of last year.  While significant changes to net positions usually warrant attention, we would put less stock in this change as it occurred over the March to June rollover, as evidenced by the massive drop off in open interest from 180k to 127k.  We view this positioning change the result of entrenched USD shorts (CAD longs) that simply did not rollover their positions come March expiry, and this in our opinion, is far less important than had it occurred at any other time.  Some talk is also making the rounds about April seasonals, which is traditionally the weakest month of the year for USDCAD (if we look back 20 years).  Just as we finish typing here, USDCAD has broken support and is testing the 1.2845-50 level.

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

 

Market Analysis Charts

USD/CAD Daily Chart

USD/CAD Hourly Chart

EUR/CAD Daily Chart

GBP/CAD Daily Chart

Charts: TWS Workspace


About the Author

Erik Bregar

Erik Bregar - Director, FX Trading

linkedin twitter

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.


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.