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EU may offer British PM a UK-wide customs union, according to RTE News

CXI October 23rd, 2018

Summary

  • USDCAD: Dollar/CAD continues to drift around the 1.3100 mark this morning as traders await the Bank of Canada’s expected 25bp rate hike tomorrow.  Overnight price action was lackluster, with the market taking its cues from the ebbs and flow of the broader USD, albeit with a muted tone.  Global equities and the energy complex is a sea of red this morning as the Nikkei lost 22,200 on the charts and European markets deal with a slew of negative earnings results.  We must note the absence of broad USD demand yet again amidst this weakness in equities, with gold shining instead (+$15 at this hour).  Today’s economic calendar is uneventful for USDCAD traders, and so we’ll be paying close attention to crude oil prices as usual.  This morning’s break below 68.50 is a bit concerning technically.  The upward drift in USDCAD remains intact above 1.3100.  Resistance remains in the 1.3120s.

  • EURUSD: Euro/dollar is bouncing a little bit ahead of NY trade today, after some relative calm returned to Italian debt markets earlier this morning.  An ugly NY close for EURUSD yesterday saw prices extend to Friday’s lows in early European trade, but this bounce has gotten us to a point where we’re now testing downward sloping chart resistance in the 1.1480s.  Some positive Brexit headlines have just crossed and the subsequent GBPUSD pop higher is helping EURUSD press against this level yet again.  We think the 1.1480s is the line in the sand today.  Trade above and we could rally further into the low 1.15s, but stay below and the sellers may pounce again.  BTPs/Bunds currently trade at +305bp.

  • GBPUSD: Sterling is being thrown a life line this morning after an RTE News report just made the rounds titled “EU may offer British PM a UK-wide customs union”.  See here.  GBPUSD has now regained chart support in the 1.3010s, but resistance in the 1.3030-1.3050 level is capping for now.  EURGBP has lost the 0.8820s after breaking above the level and defending it twice over the last 24hrs hours.  While we think it’s still too early to get excited by this report, we’re not surprised to see knee jerk short covering here given how the funds are positioned.  The think the market’s technical picture will become more clear by end of day when traders/UK policy makers have a chance to digest this.  Holding the 1.3000-1.3010 level would be somewhat constructive for price.

  • AUDUSD: The Aussie has broken down this morning, following copper prices lower as the metal continues its swift reversal of yesterday’s breakout attempt higher.  We think the Shanghai’s 2% pullback today and the broad risk off tone to global equities this morning is contributing to this.  Support at the 0.7090-0.7100 level has given way in AUDUSD and an attempt to regain it amidst this morning’s bounce in EURUSD has failed.  We think the market now looks a little shaky here sub 0.7090.

  • USDJPY: Dollar/yen is getting pummeled this morning as the S&P futures trade -40 at this hour, breaking chart support in the 2740s in the process.  Yesterday’s rally ran out of steam just shy of chart resistance at the 113 level, and today’s move lower comes at the expense of chart support in the 112.30s, which should concern fund longs once again in our opinion.  The 112.10s (next support) appears to be holding price for the moment but we haven’t seen a decent bounce yet.  Stay tuned for the US cash open for stocks.  Failure to see a bounce there may suddenly put the 111.90s under serious threat of breaking.

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

 

Market Analysis Charts

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USD/CAD Hourly Chart

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DEC S&P 500 Daily 

Charts: TWS Workspace


About the Author

Erik Bregar

Erik Bregar - Director, FX Trading

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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.


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