• Financial Institutions
  • Corporations
  • Travelers
  • SOLUTIONS
  • Foreign Bank Note Exchange
  • International Drafts
  • International Wire Transfers
  • Global EFT
  • Compensation De Chèques En Devises Étrangères
  • Traites Bancaires En Devises Étrangères
  • INDUSTRIES
  • Travel
  • Technology Companies
  • Payroll
  • Healthcare
  • Nonprofit
  • Partnerships

USD trading broadly higher but within yesterday's ranges

CXI October 3rd, 2018

Summary

  • USDCAD: Dollar/CAD is trading more or less flat this morning, as the broader USD consolidates within yesterday’s price ranges.  Chart support at the 1.2810 level held in overnight trade and chart resistance at the 1.2830 level is being tested as we head into NY trade today.  November crude oil is trading back to flat on the day after reports that Russia and Saudi Arabia privately agreed back in September to raise oil production.  More here.  Oil prices are still trading close to recent highs however as the market doesn’t believe Saudi Arabia has the spare capacity to meet the decline in Iranian exports.  The API inventory report last night showed a 907k barrel build in oil inventories last week.  Traders are expecting a build of 1.98M barrels for today’s weekly EIA report at 10:30amET.  The US just reported +230k jobs gained for the September ADP employment report, versus expectations of +163k.  Next up is the US ISM Non-Manufacturing (Services) PMI at 10amET, with traders expecting 58.0 on the headline figure.  We’ll also have three Fed speakers this afternoon (Brainard, Mester, and Powell).  Powell will be speaking at the Atlantic Festival in Washington, D.C.  The Fed’s Evans said this morning that he’s comfortable with another rate hike in December.

  • EURUSD: Euro/dollar saw a swift move higher in Asian trade overnight after the Italian newspaper, Corriere della Sera, reported that Italy would seek to lower its budget deficit from 2.4% of GDP in 2019 to 2.2% in 2020 and 2.0% in 2021.  This contrasts to the 2.4% for all three years which was agreed to last week.  EURUSD popped back up above chart resistance in the 1.1570s.  Italian assets initially celebrated the news as well with stocks and bonds trading higher, but all this is reversing now along with EURUSD as traders quickly realize that these numbers are just conjecture at this point.  Sellers are now back in control with the market below the 1.1570s.  About 1.5blnEUR in options expire at the 1.1500 strike today, with another similar amount expiring at the same strike on Friday.

  • GBPUSD: Sterling is consolidating yesterday’s losses today.  Boris Johnson’s support of Theresa May at the Tory conference yesterday did much to help GBPUSD bounce confidently off trend-line support in the 1.2940s.  These gains extending into Asian trade overnight when EURUSD popped higher.  We then saw some selling come in after the UK reported a slightly softer than expected Markit Services PMI for September (53.9 vs 54.0 expected).  Theresa May has just addressed her party on the final day of the Tory conference, saying that she would not let the country down on Brexit, but her tough talk on the EU and the further doubling down on her plan saw more GBP selling.  Markets now sit smack dab in the middle between chart support at 1.2950 and chart resistance at 1.3030.  EURGBP has stalled at trend-line resistance in the 0.8910s, which helps GBP here a little bit.

  • AUDUSD: The Aussie is extending losses this morning after traders failed to regain chart support in the 0.7180s during the market volatility that followed the release of the weak Australian Building Permits numbers last night.  Seeing EURUSD give up its gains in early European trade then gave traders an excuse to keep selling.  The market has just broken Fibo support in the 0.7150s, which means a move down to the 0.7120-30s is now possible.  December copper remains bid today, with yesterday’s rally seemingly spurred on by a surge in aluminum prices after Norsk Hydro shut a major refinery in Brazil.  Copper inventories at the COMEX and LME also continue to trend down after plateauing during the summer.  Today’s NY session features a 1.2blnAUD option expiry at 0.7190.

  • USDJPY: Buyers held the line at chart support in the 113.50s yesterday, and this has allowed the market to uptick again today.  A “risk-on” tone to US equities, a higher open for US yields, and a broadly strongly USD is also helping USDJPY this morning.  The next chart resistance level lies at 114.20.  The EURJPY cross appears trapped between resistance at 131.90 and support at 131.20.  Interestingly, the JGB yield has nudged higher to 0.14% today.  Recall the BOJ’s new line in the sand (with regard to intervention) was moved from 0.11% to 0.2% earlier this year.

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

 

Market Analysis Charts

USD/CAD Daily Chart

USD/CAD Hourly Chart

November Crude Oil Daily Chart

EUR/USD Daily Chart

EUR/USD Hourly Chart

USD/CNH Daily Chart

GBP/USD Daily Chart

GBP/USD Hourly Chart

EUR/GBP Daily Chart

AUD/USD Daily Chart

AUD/USD Hourly Chart

December Copper Daily Chart

USD/JPY Daily Chart

USD/JPY Hourly Chart

EUR/JPY Daily Chart

Charts: TWS Workspace


About the Author

Erik Bregar

Erik Bregar - Director, FX Trading

linkedin twitter

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.


About Exchange Bank of Canada
Exchange Bank of Canada (EBC) is a Schedule 1 bank based in Toronto, Canada. EBC specializes in foreign exchange services and international payments providing a wide range of services to financial institutions and corporations, including banknote foreign currency exchange, travelers' cheques, foreign currency cheque clearing, foreign currency bank drafts, Global EFT and international wire transfers through the use of EBC's innovative EBCFX web-based FX software www.ebcfx.com.

Disclaimer: All product names, logos, and brands are property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, logos, and brands does not imply endorsement.

This publication has been prepared by Exchange Bank of Canada for informational and marketing purposes only. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable, but no representation or warranty, express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as a representation for which Exchange Bank of Canada, its affiliates or any of their employees incur any responsibility. Neither Exchange Bank of Canada nor its affiliates accept any liability whatsoever for any loss arising from any use of this information. This publication is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any of the currencies referred to herein, nor shall this publication be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The general transaction, financial, educational and market information contained herein is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a "call to action" or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. You should note that the manner in which you implement any of the strategies set out in this publication may expose you to significant risk and you should carefully consider your ability to bear such risks through consultation with your own independent financial, legal, accounting, tax and other professional advisors. All Exchange Bank of Canada products and services are subject to the terms of applicable agreements and local regulations. This publication and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced in whole or in part, or referred to in any manner whatsoever nor may the information, opinions and conclusions contained in it be referred to without the prior express written consent of Exchange Bank of Canada.