SUMMARY
• Canadian April GDP expected +0.1% MoM. Bank of Canada’s Business Outlook Survey out at 10amET.
• Traders on G20 & OPEC watch as well.
• USDCAD threatening break of 1.3080s chart support. AUDUSD trading as if G20 will not yield any negative surprises.
• EURUSD continues to range while GBPUSD finds another reason to bounce. UK reports final Q1 GDP +0.5% QoQ.
• USDJPY clinging to chart support in 107.50-70 as interest rates maintain offered tone into weekend.
• Official Chinese PMIs for June out Saturday. Caixin surveys out Sunday night.
• Canadian markets closed for Canada Day on Monday. OPEC meeting joint press conference at 7amET Tuesday.
ANALYSIS
USDCAD
Dollar/CAD has slumped down to trend-line and Fibonacci chart support in the 1.3080s this morning as traders await a big day for Canadian data. First up are the GDP figures for April at 8:30amET, where the consensus is looking for a marginal +0.1% MoM gain following March’s stellar +0.5% read. We’ll also get some inflation data, as the Raw Material Price Index and Industrial Product Price reports for May will come out. The expectations here are for +1.1% MoM on the former and +0.1% on the latter. The US will be reporting the Fed’s favorite core PCE Index for May this morning (exp +0.2% MoM and +1.6% YoY) as well as the June reads for the Chicago PMI (9:45amET) and the Michigan Consumer Sentiment Index (10amET). However, the highlight will likely be the Bank of Canada’s quarterly “Summer” Business Outlook Survey (BOS) at 10amET and the 1blnUSD+ of USDCAD options that expire at the same time around the 1.3090-1.3100 strikes. The survey disappointed markets last time around, by showing lost momentum in investment and hiring plans as well as inflation expectations. There is some market chatter that this quarter’s report could be skewed by the US/Mexico tariff spat that came at the end of May as the sample period for the report went from early May to early June. We think the results of the BOS will drive price action for USDCAD today and play a factor, as always, in the Bank of Canada’s next interest rate decision on July 10. Headlines from the G20 could be a factor today as well, however the much anticipated meeting between Presidents Trump and Xi will occur on Saturday. Crude oil traders are trying to push the August futures up towards $60 again this morning as the OPEC meeting looms on July 1st and 2nd. The core OPEC members will meet on Monday, the non-OPEC members (the most important being Russia) will join the conversation on Tuesday, and then they’ll be a joint press conference on July 2nd at 7amET to announce their decision on the level of oil production cuts for H2 2019. Canadian markets will be closed on Monday for the Canada Day holiday.
USDCAD DAILY
USDCAD HOURLY
AUG CRUDE OIL DAILY
EURUSD
Euro/dollar has found a bid this morning, but it isn’t anything to write home about as we’re still trading in the 1.1350-1.1400 range we talked about yesterday. Month end and quarter end flows will likely keep things choppy today, as will some chunky option expiries between the 1.1350 and 1.1400 strikes totaling approx 2blnEUR. The German 10yr bund yield is trading steady near its June lows in the -0.32% area.
EURUSD DAILY
EURUSD HOURLY
AUG GOLD DAILY
GBPUSD
Sterling is bouncing higher off the 1.2660 support level yet again this morning, and this time we see it coinciding with an in-line read on the UK’s final GDP figures for Q1 2019. The numbers came in +0.5% QoQ and +1.8% YoY, was which also very much in line with the initial read back on May 10th. The EURGBP cross appears to be struggling once again with forays into the high 0.89s, which leads us to believe their could be option related selling in play at the psychological 0.9000 level.
GBPUSD DAILY
GBPUSD HOURLY
EURGBP DAILY
AUDUSD
The Australian dollar is throwing all caution to the wind as breaks above the psychological 0.7000 level in the last 24hrs. It’s almost as if this market already believes there will not be any negative developments out of the G20 this weekend. Speaking of the weekend, the G20 won’t be the only thing to watch. We’ll also get the official Chinese PMI figures for June (both Manufacturing and Non-Manufacturing numbers) at 9pmET on Saturday night. The consensus estimate is for 49.5 on the former and 54.5 on the latter. Sunday night at 9:45pmET will bring the Caixin surveys out of China (which is the private version of the PMIs). Offshore dollar/yuan is trading steady within a wide 6.83-6.89 range ahead of this important weekend.
AUDUSD DAILY
AUDUSD HOURLY
USDCNH DAILY
USDJPY
Dollar/yen is trying to cling to chart support in the 107.50-70s as global interest rates maintain their offered tone from yesterday heading into the G20. We continue to believe that a firm close above the 107.70s (which didn’t happen yesterday) will usher traders into a higher range trade here, and we think just the absence of negatives from this weekend’s G20 will be enough to get us there.
USDJPY DAILY
USDJPY HOURLY
US 10YR YIELD DAILY
Charts: TWS Workspace
About the Author
Erik Bregar - Director, Head of FX Strategy
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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