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

2018-01-12 08:15

EUR surging on German coalition breakthrough. GBP following suit. Commodities lagging. US CPI/Retail Sales on deck

Source: EBC Trading Desk


  • UPCOMING ECONOMIC DATA: Dec US CPI and Dec US Retail Sales.  Markets expecting +2.1% YoY and +0.5% MoM respectively.

  • USDCAD: Dollar/CAD struggled for most of the NY session yesterday as broad based USD selling elsewhere cancelled out some of the negative NAFTA market chatter.  That theme continues this morning as EURUSD makes a new swing high, and so USDCAD is hugging the trend-line it broke out from on Wednesday.  EURCAD and GBPCAD are surging today, and that’s helping USDCAD from not being much lower.  AUDUSD, copper and commodity prices in general are not benefiting from this recent wave of USD weakness, and CAD is being lumped in there right now as well (mildly USDCAD supportive).  The CA/US 2yr yield spread is up again today, now +23bp (USDCAD supportive).  We feel USDCAD coasts today as any broader bid from the USD post CPI/Retail Sales would likely be offset by CAD cross sales.  Chart support at 1.2510, then 1.2480s.  Resistance 1.2570-1.2580.

  • AUDUSD: The Aussie is struggling big time today, and while it’s not down much overnight, it cannot muster any strength amidst the EUR rally now underway.  Copper came under pressure in European trade as it continues to run into chart resistance.  AUDUSD also failed technically overnight at chart resistance around the 0.7900 level.  Resistance now 0.7890-0.7900.  Support 0.7850-0.7660.  Today’s large option expiry at 0.7810-0.7815 won’t likely be a factor unless 0.7850 gives way.  We feel that AUDUSD will likely coast today as well.

  • EURUSD: The Euro is all the rage this morning as traders take the market to new swing highs on the positive German political news.  It was reported overnight that Merkel has reached a breakthrough with the SD party; a development that hopefully ends the political quagmire that has been gripping Germany since December and will allow Merkel to finally form a coalition government.  Combine this bullish news with a strong close on the charts yesterday and a break of chart resistance early this morning (1.2030-1.2040), and we have the perfect scenario for news highs that we alluded to yesterday.  EURUSD has just breached another trend-line resistance level in the 1.2120s, but it’s struggling a bit here ahead of the US numbers.  This will be an important level to watch today.  The US/GE 10 yr yield spread is understandably softer, now at +202bp.  USDCNH is lower again today, completely reversing this week’s move, but it’s finding some mild support here ahead of the US numbers.

  • GBPUSD: Sterling is surging higher today as well, almost in lockstep with EURUSD.  The bullish inverted hammer reversal, that we alluded to yesterday, did come to fruition.  Combine this bullish trading pattern yesterday with a break of two trend-line resistance levels overnight and a surging EURUSD and traders had all the confidence they needed to push GBPUSD higher as well.  The market is running into another trend-line resistance level now (1.3640), and like EURUSD, it’s struggling here a bit ahead of the US numbers.

Market Analysis Charts






March Copper

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? Contact Us or call EBC's trading desk directly at 1-888-728-4918.

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