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


2018-02-02 08:12

US jobs report in focus. BOJ goes full throttle on yield curve control. Stocks under pressure.

Source: EBC Trading Desk

Summary

  • USDCAD: The January US jobs report is the focus for FX traders this morning, and the market consensus is for a gain of 180k jobs and an increase of 0.3% MoM (2.6% YoY) in average hourly earnings.  The broader USD is seeing some short covering ahead of these numbers, and USDCAD is benefiting as a result.  Despite a poor NY close yesterday, we’re now trading back above familiar, downward sloping, trend-line support (which today checks in at 1.23 even).  This is mildly positive as it puts the 1.2330s back in focus, from a technical perspective.  A strong US jobs report would very likely put trend-line resistance at 1.2360-1.2370 to the test.  A weak report would very likely see the market lose 1.23 once again and attack 1.2250. 

  • AUDUSD: The Aussie is having a very rough overnight session, despite a strong late day turn-around back above 0.8030-0.8040 yesterday.  It’s a broad USD-led move, more than anything AUD related in our opinion.  While we don’t think the party is over completely for bulls, there seems to be some angst in the market ahead of the US jobs report (which could beat expectations...if Wednesday’s ADP was any indication) and the RBA interest rate announcement on Tuesday (which will likely be dovish, according to a Reuters poll)...all that would be AUDUSD bearish.  The market has currently lost trend-line support at 0.8000 by about 10pts.  A beat on US jobs will likely see the market extend losses to the 0.7940-0.7950 area.  A poor US jobs report would likely see the market revisit 0.8030-0.8040.  Copper is back to UNCH as an attempt higher earlier in London trading got smacked down at trend-line resistance (3.24).

  • EURUSD: The Euro has had a quiet overnight session as traders await the main event of the day today.  Yesterday’s close was as bullish as it could be (closing above 1.2500 and near the swing high).  USDCNH tried to punch lower overnight after the PBOC fix, but it managed to hold the 6.28 level and regain the 6.29s in fact.  This can sort of explain EURUSD softness as well, however USDCNH is still stuck in a pronounced downtrend.  We feel only a move above 6.31 would have us question EUR strength at this point.  EURJPY continues to be a star, rallying over 200pts this week.  It’s running into a bit of trend-line resistance here though (137.20).  EURGBP has recovered smartly back above the 0.8770s, the level it smashed below late Wed/early Thurs.  It will very likely be a big day for markets considering how bullish the positioning is for EURUSD going into these numbers.

  • GBPUSD: Sterling is mildly softer in overnight trade as well as traders await the US jobs report.  The NY close was good, from a technical perspective, as we closed above 1.4250 and near the swing highs (like EURUSD), and the overnight pullback hasn’t threatened bulls all that much (new trend-line support at 1.4220 is holding).  It could be a big day here for GBPUSD as well, considering there’s still very little overhead resistance in this market.  Trend-line support today checks in at 1.4120-1.4130.

  • USDJPY: The big news overnight out of Japan was a headline from the BOJ during their daily JGB buying operation, where the central bank said it was going to buy unlimited amounts of JGBs at 0.11%.  Some traders are laughing saying this is evidence the BOJ has lost control of monetary policy.  USDJPY traders didn’t want to stand in the way for the time being though, and bid the market up as a result (as talk of yet more QE is fundamentally bearish JPY).  With that, USDJPY has broken trend-line resistance in the 109.60-70s, and now looks poised to test 110.00-110.20.  The US jobs report is up next at 8:30amET.  Global equities are under pressure this morning, but we’re not seeing any “risk-off” JPY flows at the moment.

 

Market Analysis Charts

USD/CAD Chart

AUD/USD Chart

EUR/USD Chart

GBP/USD Chart

USD/JPY Chart

EUR/GBP Chart

USD/CNH Chart

March Copper

Charts: TWS Workspace


About the Author

Erik Bregar

Erik Bregar - Director, FX Trading

linkedin

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 www.ebcfx.com.

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 08:12 AM