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

2019-01-18 08:15

Canadian December CPI reported +2.0% YoY and -0.1% MoM.

Source: EBC Trading Desk


  • USDCAD: Dollar/CAD traders continue to play the range ahead of this morning’s Canadian CPI report.  Yesterday’s price action was capped by trend-line resistance in the 1.3310s, and supported by trend-line support in the 1.3250s.  We saw a flash dip in prices (broad CAD and AUD buying) in the middle of the afternoon when the WSJ reported the US was considering lifting China tariffs in an effort to hasten a trade deal.  The US Treasury department then denied this story, at which point USDCAD clawed back half its losses.  Overnight night trading activity seems to have re-focused on the “positives” of the WSJ article, and so we’re seeing some broad “risk-on” sentiment (stocks, yields and commodities up while USD and JPY down).  This morning’s Canadian CPI figure could be an inflection point for USDCAD after a week of lackluster range-trading.  Market participants are expecting +1.7% YoY in December, and -0.4% MoM.  We’d be wary of an upside surprise here that challenges chart support, especially after yesterday’s staunch rejection of the 1.3310 level.  The purge of CAD futures positions at the CME continued for a remarkable 10 days in a row yesterday!  Makes it hard to break out one way or the other when everybody is getting out.  BREAKING:  Canada December CPI reported +2.0% YoY and -0.1% MoM.

  • EURUSD: Euro/dollar is drift higher this morning in response to the risk-on tone to US equity futures, but it’s nothing to write home about.  Trend-line resistance in the 1.1410s is now upon us, and while there’s nothing major on the US economic calendar today to shake things up, we think a further drift above this level will incite buying.  The next chart resistance levels are 1.1430, then 1.1460.  Support is 1.1385, then 1.1360.  The Chinese yuan continues to struggle here (USDCNH steady) as the Chinese inject boat loads of liquidity into the financial markets ahead of the Chinese Lunar New Year holidays (Feb 4 – Feb 10).  Speaking of holidays, US markets will closed on Monday for Martin Luther King Day.

  • GBPUSD: Sterling had a terrific session yesterday; rallying over 100pts higher.  While we were hard pressed to find a specific Brexit headline to drive the price action, we would note key breaks of technical levels on both the GBPUSD and EURGBP chart (above 1.2920s on the former, and below 0.8830s on the latter).  Brexit resolution optimism seems to be growing as the likelihood of a 2nd referendum now doesn’t seem realistic, but one could also make the argument that the short fund position needs to be fed more negative news and it’s simply not coming, so they’re covering positions just in case.  Late yesterday we posited that the 1.2970s would be pivotal for GBPUSD heading into today, and we’ve since seen some selling as the market moved back below this level.  The UK reported weaker than expected Retail Sales figures for December today, but markets largely ignored this.   Theresa May is expected to announce her Brexit “Plan B” on Monday.  We’re also paying close to attention to whether Theresa May and Labour leader Corbyn can finally resolve their impasse and work together.  Chart support today lies in the 1.2880s.

  • AUDUSD: The trade-sensitive Aussie was a natural beneficiary of the WSJ story yesterday; rocketing higher about 50pts when the headline crossed.  Down-ward sloping trend-line resistance in the 0.7220 ruined the optimism yet again, and then of course we had the denial from the US Treasury which dragged us off the highs.  AUDUSD now sits trapped in the middle of a familiar price range, and given the downward sloping nature of this range, support today is in the 0.7170s and resistance is in the 0.7210s.  Copper prices are trading up 1% today, but this is not doing much to help the market.  Australian dollar futures traders continued to liquidate positions for the 3rd day in a row yesterday (open interest down 3,256 contracts).  We think the Aussie can resume its rally should we get a catalyst to break us above the 0.7210-20 level.

  • USDJPY: Dollar/yen traders have pushed the market to a 1-week higher this morning, after yesterday’s WSJ article led to gains above chart resistance in the 109.10s.  Today’s follow-through higher for US equity futures appears to be helping as well, but some selling is starting to creep in now at trend-line resistance in the 109.40s.  Over 2blnUSD in options expire at the 109.00 strike today, so we may see the market struggle here a bit.

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


Market Analysis Charts

USD/CAD Daily Chart

USD/CAD Hourly Chart

March 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

March Copper Daily Chart

USD/JPY Daily Chart

USD/JPY Hourly Chart

March S&P 500 Daily

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 Jennifer Danuff at 08:15 AM