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

2017-11-07 08:15

$USD broadly bid. $EUR and $AUD traders resume selling. $CAD traders watching Poloz today.

Source: EBC Trading Desk


  • AUDUSD: The Reserve Bank of Australia delivers a dovish hold on interest rates yet again overnight (as expected).  Market takes a look at the 50% Fibo of the May-Sep rally and then fizzles lower.  Broad USD rally in Europe helping.  Market still has weak technicals with a test of the 61.8% Fibo a possibility going into Friday’s Quarterly Statement on Monetary Policy.  A rally back above 0.7700 would do much to halt declines and repair the daily chart.  Futures traders liquidated 928 contracts yesterday.  

  • USDCAD: Market is trying to work off a negative NY close yesterday as big moves in crude oil start to make headlines again.  As we mentioned last week, CAD traders are starting to watch the oil market again as correlations slowly improve, but we note the correlation is really only kicking in on days when oil has a big move.  Today is all about Poloz.  The central bank governor will be speaking about inflation just before 1pm and then he’ll have a press conference with Q&A at 2pm.  The market dipped below the 38.2% Fibo in Asian trade but has since recovered on broad USD strength through the London session, with the 1.2770s now capping.  Notice that we’re now able to draw a parallel line to Sep-Oct upward trend-line that the market hugged for 2 months, thus creating an upward channel.  USDCAD is now technically below it with a lot of resistance above ahead, leaving us to believe we’re now stuck in a bit of a range with the path of least resistance lower.  Futures traders unwound 1254 contracts yesterday.

  • EURUSD: Technical selling pressure continues to weigh on the Euro with traders talking about the “measured move” for the head & shoulders top taking us all the way down to the 1.12s.  This pattern is still getting a lot of air time, but it’s been a hard trend to fight.  Hearing talk now of barrier options at the 1.1550 level, which could act as near-term support if option traders defend.  Bloomberg also out with a headline just before 7am saying some EBC policy makers challenged Draghi and the final decision not to put an end date on QE.  So EURUSD is holding steady a bit as we enter NY trading.  Market is still technically a sell on rallies so long as we trade below 1.1625.  Futures traders added 1910 contracts yesterday.

  • GBPUSD: Sterling roared back yesterday on reports Theresa May kick-started Brexit talks again by accepting a 53bln GBP bill, but don’t get too excited folks.  We’ve just erased some of the technical damage from the Bank of England move last week, and we’re now technically back in that 1.31-1.33 range we’ve been talking about.  EURGBP and GBPJPY flows have supportive so far this week.  Hearing talk this morning of a large option expiry today at 1.3150 that will likely contain activity going into 10am.  Nothing on the UK data front until Friday’s Industrial Production and Trade Balance figures.  There are a few BOE speakers on the calendar before then.  Futures traders liquidated 2028 contracts on the move up yesterday (post BOE shorts getting out?).

  • USDJPY: Dollar/yen is holding up surprisingly well despite yesterday’s daily reversal and the week long divergence against US treasury yields (US yields have back off 15bp from recent highs while USDJPY remains near its highs).  Some traders are chalking this up to the relentless rise in the Nikkei and persistent demand from Japanese investors on dips in USDJPY.  We feel USDJPY is at a key inflection point (113.75-114.50 area).  A lot needs to go right here to feed the JPY bears as positioning is starting to get a little crowded.  We also note the EURJPY chart which continues to look like it’s topping out.

  • USDCNH: We’re also watching the Dollar/Yuan this morning as it looks poised to break out to the upside (this would be a break of a downward channel going back to March and a break of a triangular consolidation which starting forming in October).  Given recent inverse correlations with EURUSD, we’ll be watching this pair very closely.  

Currency Calendar

Date Releases / Holiday Entity
November 7, 2017 ECB President Draghi's Speech EUR
November 7, 2017 BoC Governor Poloz Speech CAD
November 7, 2017 Fed's Yellen Speech USA

Bank holidays and impactful report releases for select countries.

Market Analysis Charts







Charts: TWS Workspace

About the Author

Erik Bregar

Erik Bregar - Trader


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?

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 Rachel Butler at 08:15 AM