$GBP knocked down again by UK/Brexit drama. Broader $USD quiet. Central bankers in focus tomorrow in Frankfurt.

Summary

• USDCAD: It’s been a quiet start to the week for CAD with the broader USD and oil markets trading around where they closed out on Friday.  Today is also a banking holiday in Canada (Remembrance Day in lieu) and so some Canadian desks will likely be staffed lighter than normal.  Market technicals haven’t changed much since Friday, but it’s encouraging to note that the 1.2660s continues to hold.  Recall this is an important support level near-term.  Resistance today lies in the 1.2720-30s, then 1.2780s.  EURCAD flows have been supportive since Friday while GBPCAD has fallen apart yet again on negative UK political news over the weekend.  It’s going to be yet another quiet week for Canadian data with the headliner being Canadian CPI out Friday.  We get Cdn Existing Home Sales on Wed and Manufacturing Sales on Thurs.  The next round of NAFTA talks resume Wednesday, so we’ll be on the lookout for headlines.  We continue to feel that USDCAD is in a range-bound to lower trading pattern here until such time resistance in the low 1.28s is tested.

• GBPUSD: Just when we thought the GBP was repairing itself technically (recall we said a strong close above 1.32 would be positive), we get some negative headlines out of the UK over the weekend that the trading algorithms were sure to jump on (Sunday Times reported 40 MPs want Theresa May to go, and French press quoting the EU’s Barnier saying EU preparing for possible “collapse” of Brexit talks).  GBPUSD is now trading back down at the lower end of the recent range.  Support now 1.3050s.  Resistance 1.3110.  EURGBP is looking a whole lot better technically (above last week’s high) which is GBP negative.  On the UK data front, we get CPI and other inflation data tomorrow, Employment Data on Wed, and Retail Sales on Thurs.  We have a few BOE speakers this week as well: Cunliffe on Tues, Broadbent on Wed, and a whole panel on Thurs (Carney, Broadbent, Cunliffe, Place, Ramsden, Woods).

• EURUSD: It’s been a very quiet start to the week for EUR as well.  Support in the 1.1620s continues to hold and resistance in the 1.1660-70s has yet to be seriously attacked.  Recall this is the “neck-line” of the head & shoulders topping pattern that everyone has been talking about for weeks.  Tomorrow we get potentially more market moving data: China Retail Sales/Industrial production, Eurozone GDP/Industrial Production, German GDP,CPI, ZEW survey and US PPI, along with the ECB panel with four central bankers in attendance.  We continue to watch technical levels in EURUSD and see a quick pop into the 1.17s if the resistance we noted above gives way.

• USDJPY: Dollar/yen is tracking US yields and S&P futures lower overnight in a soft start to the week.  The 113.50 level is now resistance again.  Support 113.10-20.  The BOJ’s Kuroda speaks later today in Zurich.  Japanese GDP tomorrow.  We feel USDJPY risks slipping further here as extended USD long (JPY short) positioning and negative cross flows exert influence.

• CENTRAL BANK SPEAKERS: (Tues 5amET) Yellen, Draghi, Carney & Kuroda speak on ECB Panel in Frankfurt.

• CME OPEN INTEREST CHANGES 11/10: AUD +2088, GBP +2068, CAD +884, EUR +3918, JPY +4739

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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.

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