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2018-01-05 08:15

All eyes on US payrolls and other data in a busy Friday session

Source: EBC Trading Desk

Summary

  • ECONOMIC DATA UPDATE: The November Australian Trade balances figures released last night were a big disappointment.  A -628mln AUD deficit was reported versus expectations of a $550mln AUD surplus.  October’s figures were revised lower from a surplus to a deficit as well.  Eurozone CPI for December came in at +1.4% YoY, in line with consensus.  On deck for today’s North American session: Canadian Dec employment figure (just +2k new jobs expected), US Dec employment figures (+190k new jobs expected), US Nov Trade Balance (-$48.3bln deficit expected), and the US Services ISM (57.6 expected).

  • USDCAD: Dollar/CAD put in another poor performance yesterday on the charts.  Key near-term resistance was tested again after the US ADP numbers, but the market failed yet again at the level.  Sellers then had a easy time pushing the market below the 1.25 handle, on a closing basis, for the first time in 2 months.  Flows from EURCAD and GBPCAD turned negative after the London close yesterday, and that didn’t help either.  All eyes are on the Canadian and US employment reports, which will be released at 8:30amET today.  There is near term support at 1.2450-1.2470, but that’s about it until the mid 1.23s.  The 1.2530-1.2540 level is still near-term key resistance.

  • AUDUSD: The Aussie is finally taking a breather here, and the culprit was the poor Australian trade figures released overnight.  However, this pull back is coming after another stellar performance yesterday, and so AUDUSD is still trading key trend-line resistance (which is positive).  Copper is all the way back down to Wednesday’s lows after staging a big rally yesterday.  The AU/US 2yr yield spread is down yet again today, now -9bp.  So we have an interesting divergence developing here between AUDUSD and its traditional underlying drivers.  It warrants caution.  Traders here will be watching US payrolls as well.

  • EURUSD: The Eurozone CPI data released overnight was a non-event.  Traders here are more focused on the US employment report.  Technically speaking, the market continues to consolidate yesterday’s European gains fairly well.  Support today comes in at 1.2030, then 1.1980.  Resistance is 1.2080-90, then 1.2115-25.  EURGBP failed to build on its momentum yesterday and is now struggling to keep above the 89 handle.   EURJPY continues to march higher, but this is a JPY story more than anything else right now.

  • GBPUSD: Sterling has been choppy in the last 24hrs, hugging a trend-line that has acted as both support and resistance this week (see chart).  Traders here await US payroll data as well.

  • USDJPY: Dollar/yen has been a star performer yet again, rallying after the US ADP beat yesterday, and then some overnight as chart resistance in the 112.70s gave way.  The market has surged back above 113 and is now hitting some more trend-line resistance as we write (113.20s) ahead of US payrolls.  The JPY continues to be a victim of the tenacious global rally in stocks to start 2018.  The S&P500, the German DAX and the Nikkei are all up huge in the last three days and the JPY traditionally gets bashed across the board in such “risk-on” environments.  This time is no different.  Technical breakouts on the EURJPY and GBPJPY charts are helping too.  Traders will be watching how US yields respond to the US payrolls data today.  USDJPY started the week and the year looking shaky technically, but it has turned the corner significantly in just three days.  A strong close today would invite a test of the high 113s, possibly 114.

Market Analysis Charts

USD/CAD Chart

AUD/USD Chart

EUR/USD Chart

GBP/USD Chart

USD/JPY Chart

Charts: TWS Workspace


About the Author

Erik Bregar

Erik Bregar - Trader


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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 1-888-728-4918.


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Posted By Rachel Butler at 08:15 AM