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$EUR breaks higher. Central bankers don't say much in Frankfurt. COT shows extending JPY positioning.

CXI November 14th, 2017

Summary

  • BUSY OVERNIGHT SESSION FOR ECONOMIC DATA: Australia NAB survey blows away expectations, coming in at +21 (all time high).  Chinese Retail Sales and Industrial Production figures come in weaker than expected (+10% and +6.2% respectively).  German GDP beats at +0.8%.  UK CPI comes in a tad light at +3.0% YoY vs +3.1% expected.  Eurozone Q3 GDP is reported in-line with expectations (+2.5%).  German ZEW survey comes in at 88.8, a slight beat.  US PPI on deck for today (+2.3% YoY expected).

  • FIRST ECB CONFERENCE ON CENTRAL BANK COMMUNICATION HAS SO FAR BEEN A NON-EVENT: The ECB’s Draghi, the Fed’s Yellen, the BOE’s Carney and the BOJ’s Kuroda all spoke after the 5am hour, but no market moving statements have been made so far.

  • CTFC COMMITMENTS OF TRADERS REPORT (NET SPECULATIVE POSITIONS AS OF NOV 7) - GBP longs bail after the dovish rate hike from the Bank of England, market now net short a little bit.  USD shorts (CAD longs) use the pullback in USDCAD to get out of losing positions.  The dip below 1.16 in EURUSD last week was met with buying (longs adding and shorts covering), making the net long position grow to a 3 week high.  JPY shorts (USD longs) made fresh 3 year highs ahead of the Kuroda speech and market reversal in USDJPY last Sunday night.

  • CME OPEN INTEREST CHANGES 11/12: AUD +2049, GBP -3386, CAD -2696, EUR +3485, JPY -45

  • AUDUSD: The NAB survey was all the talk in Australia overnight.  With that, the selling in Aussie has ceased for the time being.  The market has also bounced off a key support level in the 0.7610-0.7620 area (the 61.8% Fibo retracement of the May-Sep move + lower bound of channel support).  See chart.  We feel AUDUSD may drift a little higher here but the daily trend is still down and resistance comes in at 0.7650 (mid-channel resistance).  Next support is 0.76 even, which also corresponds with a weekly uptrend line going back to Jan 2016.  AUDNZD flows have been supportive today.  Thursday is a big day with Australian employment figures due.

  • USDCAD: Not much going on in CAD over the last 24hrs, other than a nice technical bounce off the key support level we’ve been talking about since Friday (1.2660s).  We broke through the 1.2720s in overnight trade (formally support, no resistance), so that is positive, but we’re starting to come in again now as the EURUSD rally incites some broad USD selling.  We’re still calling this market range-bound to lower.  Key resistance now 1.2770-1.2800.  Cdn Existing Home sales tomorrow.

  • EURUSDThere you have it folks.  The 1.1660-70s have given way on EURUSD, effectively cancelling the overly reported H&S topping pattern, and the market is now surging back into 1.17s.  Better than expected German GDP got the ball rolling this morning, along with EURGBP cross buying as UK CPI disappointed.  As we mentioned yesterday, EURGBP continues to look a whole better technically and we now see foresee a retest of the 90 handle (which would be EUR supportive).  Next stop for EURUSD?  The 1.1750s (which in the 38.2% retrace of the Sep-Nov down move), then 1.1810 (the 50% retrace).  Support comes in at 1.1700-1.1710 (upper bound of downward channel).  An impressive day to say the least for EURUSD, which will likely have traders repositioning.  We will be watching very closely how we close out today.  Will the 3 week high of EUR longs take some profit here?  A strong close above the 1.1750s would invite the 1.18s and quickly turn this market into a “buy the dip” play.

  • GBPUSD: Sterling can’t seem to get out of its own way.  The chop continued overnight and the weaker than expected UK CPI print didn’t help.  We remain marred in range-trade here, with 1.3070-80 supporting and resistance now coming in at the 1.3160-70 area.  We get UK employment data tomorrow and Retail Sales on Thursday.

  • USDJPY: Dollar/Yen enjoyed a bit of a pop in early European trade, led by EURJPY buying, but that has since fizzled and the market is trading back down into yesterday’s NY range.  The latest COT report (released late due to a public holiday on Friday) further confirms our view that the USD long (short JPY trade) is getting increasingly crowded.  Recent longs have to ask themselves what they want to do here as they’re likely underwater now.  US stocks and treasury yields are mildly weaker overnight.  We’re still calling it range-bound to lower here for USDJPY, with technicals and extended positioning weighing.  Support 113.10-20.

  • USDCNH: Not much fanfare out of China overnight with the weaker than expected Chinese data.  Traders seem to be having second guesses about breaking the Yuan lower here (see chart), but the bullish pattern is not dead yet.

Currency Calendar

Date Releases / Holiday Entity
November 14, 2017 EUR German Gross Domestic Product w.d.a. (YoY) (3Q P) EUR
November 14, 2017 EUR German Gross Domestic Product n.s.a. (YoY) (3Q P) EUR
November 14, 2017 EUR Italian Gross Domestic Product w.d.a. (YoY) (3Q P) EUR
November 14, 2017 GBP Consumer Price Index (YoY) (OCT) GBP
November 14, 2017 GBP Core Consumer Price Index (YoY) (OCT) GBP
November 14, 2017 EUR Euro-Zone ZEW Survey (Economic Sentiment) (NOV) EUR
November 14, 2017 EUR German ZEW Survey Expectations (NOV) EUR
November 14, 2017 USD Yellen Speaks on ECB Panel with Draghi, Kuroda, and Carney USD
November 14, 2017 EUR Draghi, Yellen, Carney, Kuroda Speak in Frankfurt EUR
November 14, 2017 EUR Euro-Zone Gross Domestc Product s.a. (YoY) (3Q P) EUR
November 14, 2017 JPY Gross Domestic Product Annualized s.a. (QoQ) (3Q P) JPY

Bank holidays and impactful report releases for select countries.

Market Analysis Charts

AUD/USD Chart

USD/CAD Chart

EUR/USD Chart

GBP/USD Chart

USD/JPY Chart

USD/CNH Chart

Charts: TWS Workspace


About the Author

Erik Bregar

Erik Bregar - Trader


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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.

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EUR German Gross Domestic Product w.d.a. (YoY) (3Q P)