• 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 mixed to weaker following negative political developments for Trump

CXI August 22nd, 2018

Summary

  • USDCAD: Dollar/CAD managed to hold chart support in the 1.3010s yesterday and while we got a bounce in prices, the move higher was tepid.  CAD cross buying was prevalent and this countered out the negative influences of a higher EURUSD.  Yesterday’s negative political developments for Trump (Michael Cohen’s plea deal + Paul Manafort’s guilty verdicts) put a dent in US stocks and the broader USD towards the end of the session.  We’re seeing a little more of this as NY trading gets going this morning with Cohen’s lawyer saying “no dispute that Trump committed a crime”.  Canadian Retail Sales for June were just released and the numbers at first glance were a disappointment, coming in at -0.2% MoM vs +0.1% expected on the headline and -0.1% MoM ex Autos (in-line), but the May figures were revised higher from +2.0% MoM to +2.2%...so overall a mixed report.  Today calendar also features the weekly EIA oil inventory data at 10:30amET (expectations for a draw of 1.497M barrels), followed by the FOMC Minutes from the Aug 1st Fed meeting at 2pmET.  October crude oil is trading up strongly this morning after the API inventory report showed a surprise 5.17M barrel draw over the last week, however with USDCAD seemingly taking this in stride and crude oil running into some resistance here at 67.10-67.20, we think USDCAD could very well bounce here again.  Headlines are just crossing now from the USTR saying there is no deal yet on NAFTA and that major issues remain.

  • EURUSD: Euro/dollar rallied strongly during NY trading yesterday, closing the session above trend-line resistance in the 1.1460s.  This technically bullish pattern along with Trump’s negative comments on the Fed was the fuel for further buying, which we saw overnight in Asian trade predominately.  The BTP/Bund spread has narrowed back into the +260s, but European traders appear to be wrestling with the next trend-line resistance level in the 1.1530s.  USDCNH also found a bid after three rough days of selling, and so EURUSD has stalled here a bit.  The PBOC reiterated overnight that they’re not weaponizing the Yuan: https://www.bloomberg.com/news/videos/2018-08-21/pboc-reiterates-china-won-t-use-yuan-rate-as-trade-war-tool-video.  We think EURUSD cools off a bit here after a 4-day run higher.

  • GBPUSD: Sterling is trading back to flat on the day, after receding earlier on a bounce in EURGBP.  The Cohen lawyer headlines this morning have allowed the market to regain the 1.2900-1.2910 level that capped the market late yesterday and for most of overnight trading.  We think longs remain in charge here near term so long as this level holds.

  • AUDUSD: There’s not much going on Aussie at the moment, with yesterday’s cooling off extending further a little bit after the EURUSD break higher.  Downward sloping trend-line resistance in the 0.7380s capped prices though and we’ve been on the backfoot since then.  Copper saw a wave of selling in early European trade, but found buyers on the dip.  Ditto for the Aussie.  We think the longs remain in charge so long as we trade above the 0.7320s.

  • USDJPY: Dollar/yen is struggling around the breakeven mark today as weak technicals, the US equity sell-off late yesterday, and another large option expiry today (1blnUSD) around the 110.40-50 level weigh on the market, despite broader JPY selling noted elsewhere.  We still think USDJPY remains on the defensive sub 110.60.

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

 

Market Analysis Charts

USD/CAD Daily Chart

USD/CAD Hourly Chart

October 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

September 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.