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USD steady ahead of Fed Powell's testimony before congress. Text of speech to be released 8:30am. Hearing commences 10amET.

CXI February 27th, 2018


  • USDCAD: Markets are in wait-and-see mode as all eyes will be fixated on Jerome Powell’s debut performance on capitol hill today.  The text of his speech will be released at 8:30am, and then at 10am we’ll hear the new Fed chairman speak before the House Financial Services Committee.  While there’s potential for the Fed to move markets today, we would caution that with “what incentive does Powell have to rock the boat here, especially considering it’s his first major speech as Fed chair?”  We think Powell will be a little “Yellen-esque” today, we think he’ll reiterate the Fed’s position communicated from its last meeting, and we think he’ll try to strike a balanced tone (positive about the economy but concerned about inflation/shocks).  With that, we think markets might be a little less directional than traders are hoping for.  USDCAD is trading slightly higher than the NY close at this hour, but it very much remains in the 1.2660 to 1.2715-25 range we talked about late yesterday.  EURCAD and GBPCAD are not looking great at this hour (EURCAD running into technical resistance at 1.5650, and GBPCAD is struggling to maintain the 1.57s after a bearish intra-day reversal yesterday).  The broader USD is mildly higher however, and that’s helping to keep USDCAD somewhat bid here.  Also on deck at 8:30amET is the US January Trade Balance (-72.3bln expected) and US January Durable Goods (-2.0% expected).  Just before Powell speaks at 10am, we’ll also get US February Consumer Confidence (markets expecting a read of 126).  If that’s not enough for one day, traders will also be watching what Finance Minister Bill Morneau says when he releases Canada’s next federal budget at 4pmET.

  • AUDUSD: Aussie traders continue to mark time as well ahead of the busy US calendar today.  As mentioned late yesterday on our Twitter feed, yesterday’s recovery off 0.8730 cemented an overnight trading range of 0.7830-0.7880, which is still in effect for early NY trade today.  So goes the EURUSD, so goes the AUDUSD today we feel.  Copper is off 0.6% today and that’s hurting AUDUSD a tad, but we’re still very much stuck in a range at this hour.

  • EURUSD: The range in EURUSD is getting tighter and tighter as the NY session draws nearer.  Support lies at 1.2300, then 1.2275, then 1.2230.  Resistance is at 1.2325, then 1.2350-60, then 1.2410.  EURJPY (often a big influence on EURUSD) failed twice above 132 in the overnight session, which is not a great sign for EURUSD.  USDCNH (which exhibits a tight inverse correlation with EURUSD) also firmly regained the 6.30 level in late Asian trade, which is another not so great sign for EURUSD at this hour.  The day is young though and there’s a lot of news ahead.  All eyes will be on Powell for the most part.

  • GBPUSD: Sterling, while range-bound like most of the other major currencies at this hour, is exhibiting a bit more downward momentum given yesterday’s plunge back below 1.4000.  With that,  GBPUSD is hugging the bottom end of the range we spoke about late yesterday, 1.3950-1.4015.  EURGBP continues its march higher (now well above 0.8800) and that’s hurting GBP momentum at this hour as well.  Should current support at 1.3950 give way, we would not be surprised to see a move lower to 1.3915-1.3925.  Should that give way, it’s a pretty big drop to the next support level, which is 1.3860-70.

  • USDJPY: Dollar/yen has done literally nothing in overnight trade; moving back and forth in a 30pt range.  The Nikkei and US stocks put in another strong performance yesterday, but it’s still not really helping USDJPY (market still cannot breach Monday’s opening high of 107.15.  Broad JPY buying seems to be the culprit here (take a look at EURJPY and GBPJPY).  Support in USDJPY remains at 106.60-70.  Resistance is at 107.40-60.  Again, all eyes are now on Powell.

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Erik Bregar

Erik Bregar - Director, FX Trading


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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