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2018-10-05 08:15

It's jobs Friday again!

Source: EBC Trading Desk

Summary

  • USDCAD: Dollar/CAD is trading comfortably above the 1.29 handle this morning after yesterday’s bout of equity risk aversion finally hit oil prices and knocked the commodity down $1.50 off its highs.  USDCAD held support in the 1.2850s in early NY trade yesterday, filled the Sunday opening gap (which we said on Monday was likely to occur this week), and surpassed resistance at 1.2905 by afternoon trade.  The NY close was positive in the sense that the technicals now allow for a move higher to 1.3010, but we’ll need another catalyst at this point.  Cue the US and Canadian employment reports on deck for 8:30amET this morning.  Traders are expecting +185k jobs for the US in September, wage growth of +2.8% YoY and +0.3% MoM, and a UR of 3.8%.  Recall the ADP employment report on Wednesday blew away expectations to the upside.  For the Canadian numbers, traders are expecting +25k jobs for September, wage growth of +2.6% YoY, and a UR of 5.9%.  Expect a pop to the 1.3010 level we just mentioned should we get stronger than expected US/weaker than expected Canadian result.  Expect a fall down to the 1.2825-50 level should we get the opposite result.  Finally, expect some volatile, choppy price action should we get in-line/mixed numbers, with the 1.2900 level acting as the pivot for direction.  The US and Canada also report September trade figures at 8:30am, but its 2nd tier data.  Canadian markets will be closed on Monday for the Thanksgiving holiday.

  • EURUSD: Euro/dollar trades in a holding pattern this morning ahead of the always anticipated US jobs report.  Yesterday’s price action was technically constructive in that we rallied back above the 1.1490-1.1500 level that was lost when Powell spoke late Wednesday, and managed to bounce off the same level after a downside test.  The 1.1490-1.1500 level has held again in overnight trade, which again is positive, but the results of the US jobs report will determine the course for today.  Weaker than expected numbers should allow EURUSD to build upon the positive turn in chart technicals, and we think the 1.1570s would be the next target.  Conversely, a stronger than expected US jobs headline will likely see the 1.1490s break and put serious pressure on the next Fibo support level at 1.1460, below which there is not much else.  Option expiries are sizable for EURUSD today, with 1.9blnEUR rolling off at 1.1500 and 2.2blnEUR at 1.1450.  Italian 2yr yields are rallying higher again today after PM Salvini criticized EC commissioner Juncker (SALVINI SAYS PEOPLE LIKE JUNCKER AND MOSCOVICI "HAVE RUINED" EUROPE AND ITALY), but the spreads at the long end (BTP/Bunds) remain relatively stable for the moment.  China returns from holidays next week, so expect some potential USDCNH volatility as local traders react to this week's events.

  • GBPUSD: Sterling had a technically strong session yesterday, rallying all the way higher to chart resistance in the 1.3030s after regaining the 1.2960s earlier.  We saw some backing and filling during Asian and early European trading today, and then we got another positive Brexit headline out of Reuters saying that the deal to resolve the Irish border issue is “very close”.  More here.  The headline caused a pop higher for GBPUSD, back up into the upward sloping trend-level that capped the trade yesterday.  Next up is the US jobs report.  Expect the market to breakout higher should we get a weak report.  The next major chart resistance level is almost 100pts higher at 1.3150.  Expect yesterday’s support in the 1.2960s to be challenged should we get a strong report.  Expect chop if we get a mixed bag.  EURGBP continues lower today after no real attempt was made to regain the 0.8860s yesterday.  We think this continues to help GBPUSD here.  Next week features some key UK data items on Wednesday (August figures for Manufacturing/Industrial Production, GDP and Trade)

  • AUDUSD: The Aussie is marking time as well ahead of the US jobs report, after a tumultuous three day losing streak.  A new 52 week was made overnight, but we’re bouncing a little bit here ahead of the numbers.  Copper prices plunged back lower yesterday amid the bout of risk aversion in equities.  Support for AUDUSD today is 0.7050.  Resistance is 0.7100.  We’ll get an updated read on the fund short position at CME later today.

  • USDJPY: Dollar/yen is nursing losses this morning after yesterday’s equity market sell off intensified after the US cash open.  Support in the 114.10-20 area gave way quickly, but fortunate for longs the 113.60s held price action going into the afternoon.  The market is now trading directionless as expected ahead of the US employment report.  We still think the 113.50-60 level is critical for the fund long position.  A close below it would invite liquidation in our opinion.  About 1.2blnUSD in options roll off at the 113.50 strike today, which occurs an hour an a half after the jobs report comes out.

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

US 10 Year Yields

Charts: TWS Workspace


About the Author

Erik Bregar

Erik Bregar - Director, FX Trading

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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.


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Posted By Jennifer Danuff at 08:15 AM