General Inquiries: 1-888-223-3934 | Trading Desk: 1-888-729-9716
Privacy Policy Contact us User Login

2018-11-15 08:15

UK's Brexit minister Raab resigns in shock turn of events in Brexit saga

Source: EBC Trading Desk


  • USDCAD: Dollar/CAD is struggling again this morning after chart resistance in the 1.3240s capped prices again yesterday, despite negative comments from a Democratic lawmaker about the USMCA needing changes before it can pass Congress.  Crude oil prices appear to have stabilized above the $56 level for now, and the fact that traders are shrugging off last night’s 8th consecutive weekly build in API oil inventories (+8.79M barrels) is somewhat encouraging for the commodity.  Adding to the downside pressure today in USDCAD this morning is heavy CAD cross buying, most notably against GBP, in light of today’s swift turn of events in the UK.  The US just reported October Retail Sales +0.8% MoM vs +0.5% expected, but the broader USD seems unimpressed.  Next up is the weekly EIA oil inventory report at 11amET, and a speech from the Fed’s Jerome Powell at 11:30amET.  We think USDCAD still has upside potential here, but we think the market may still want to test the resolve off longs with a downside test.  Support is 1.3195-1.3205.  Resistance is 1.3250-55.

  • EURUSD: Euro/dollar has had a volatile 24hrs.  The market broke above the 1.1300 mark as EUR traders followed the ebbs and flow of GBPUSD for most of the session during the UK cabinet meeting yesterday, and while this was a positive technical development, chart resistance in the 1.1330-40s asserted itself twice and held the market back from breaking higher.  This level was tested yet again in early European trading today and the breakout attempt failed yet again.  This technical setback, along with the 1.5% plunge in the GBPUSD that followed this morning, has dragged EURUSD right back down to yesterday’s NY opening levels.  The 1.1270-90s is now support as EUR traders try to figure out what to do next.  The BTP/Bund spread is edging higher again this morning (now at +312bp), but there hasn’t been any formal reaction yet from Brussels to Italy’s defiance on its budget revision (EURUSD negative).  USDCNH has edged below the 6.94 mark and has struggled to regain it so far this session (EURUSD positive).  Over 1.5blnEUR in options expire at the 1.1300 strike this morning.  We think EURUSD chops around here until the 1.1270s-1.1340s range breaks one way or the other.

  • GBPUSD: Everything is blowing up for Theresa May this morning as the UK PM’s supposed cabinet support for her Brexit deal appears to be vanishing after the surprise resignation of Brexit minister Dominic Raab.  This has prompted four other ministers to resign and there are also reports that Tory MP Rees-Mogg has now formally submitted a no-confidence motion against Theresa May.  Theresa May was speaking in the UK Parliament this morning, and while she remained confident in her position, her calling yesterday’s deal just a “draft treaty” is not going over well with her opposition.  The Northern Irish are not onboard either.  A whole lot of uncertainty has now entered the fray for sterling traders and it is understandable why GBPUSD is 200pts lower at this hour.  Chart support in the 1.2770s appears to be stemming the selling for now, but we would tread carefully here as the day in young and the situation still very fluid.  The next major support level lies in the 1.2680s.  UK Retail Sales for October missed estimates today, coming in at -0.4% MoM vs +0.2% expected.

  • AUDUSD: The Aussie is outperforming the other major currencies this morning after the Australian October employment report smashed expectations last night (+32.8k jobs vs. +20k).  This saw AUDUSD vault through yesterday’s NY high to test the next resistance point in the 0.7270s.  An attempt was made to break above this level in early European trading today, but like EURUSD, this effort failed and when sterling fell apart, this invited selling back into AUDUSD as well.  We think the 0.7250s will act as the pivot for today’s price action.  A bounce should give bulls another shot at the upside, but a fall below by the NY close will lead to a technically negative closing pattern.

  • USDJPY: Dollar/yen broke lower yesterday amid the swift reject of the 2740s in the S&Ps and bond trader desire to push US 10yr yields back below 3.10%.  Support in the 113.60-70s gave way in USDJPY, and this saw swift selling down to the next support level in the 113.30s.  This level is being tested again this morning, with EURJPY selling appearing to be the driver so far.  We think USDJPY risks rolling over here, especially if the 113.30s give way.

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


Market Analysis Charts

USD/CAD Daily Chart

USD/CAD Hourly Chart

December 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

December S&P 500 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

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.
Posted By Isabella Guevara at 08:15 AM