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

2017-11-03 08:15

USD mixed ahead of data heavy US session. Option traders predict no excitement.

Source: EBC Trading Desk


  • USD mixed to higher as markets await data-heavy morning ahead. AUD softer on weaker than expected Australian retail sales. EUR and JPY stuck at familiar levels with large option expiries today. USDCAD recovering a bit from yesterday’s cross sales. GBP steady after yesterday’s plunge lower. USDCNH trending higher overnight. Option traders do not see considerable volatility ahead for today’s session.

  • US and Cdn trade and employment figures at 8:30amET. Markets expecting -295bln for the Cdn trade balance, and -43.3bln for the US. Cdn employment is expected to come in at +15k, while US non-farm payrolls are expected at +312k. US Services ISM at 10am (markets expecting 58.5).

  • CME open interest changes 11/2: AUD -1533, GBP +11663, CAD -599, EUR +5385, JPY +1499

Currency Calendar

Date Releases / Holiday Entity
November 3, 2017 Unemployement Rate (Oct) USD
November 3, 2017 Unemployement Rate (Oct) CAD
November 3, 2017 Labor Force Participation Rate (Oct) USD

Bank holidays and impactful report releases for select countries.

By The Numbers: Daily FX Snapshot

USD/CAD - Canadian Dollar

Cross sales continue to take the wind out the USDCAD rally. First it was EURCAD last week and now GBPCAD this week. Market now sits below our downward trend line extensions from the spring once again (black lines on chart). Resistance 1.2840-50. Support 1.2790, then 1.2760-70. Hearing talk of a $500mln option expiry at the 1.2800 level this morning, which could weigh on prices. With a December rate hike from the Fed now pretty much priced in, traders are expecting a stronger, post-hurricane print from US payrolls to validate that narrative.


GBP/USD - British Pound

A surprising reaction to yesterday’s dovish 25bp rate hike from the Bank of England (which many could argue was expected) has hurt sterling technically across the board. GBPUSD is now trading below the October range and has momentum to threaten support at the 1.2980-1.3000 level. EURGBP rallied violently yesterday, validating Wednesday’s inverted hammer bottom. GBPJPY looks poised for a weekly bearish reversal, should there be no repair to the chart today. The follow-through from the inverted H&S bottom on GBPCAD now looks to be over as the 1.68 level has given way. Note the massive increase in open interest yesterday as the market fell (suggests new short positions). Bulls need to clear resistance at 1.31, and then 1.3140-50 before any positive momentum can return.


EUR/USD - European Union Euro

For a week that has been full of event risk, the Euro has done very little. One could make the argument that the FOMC standing pat on monetary policy and Trump picking Powell for the next Fed Chair were not surprises, but we are a little surprised by the lack of volatility, position adjustment and technical follow-through after last week’s bearish turn lower. The net long EUR position is clearly hanging in there and shorts have not been willing to add. The neckline of the daily head & shoulders topping pattern (1.1660-70) has been talked about all week and it continues to cap to the upside. If that level breaks to the upside, expect a test of the mid to high 1.17s. Weekly support is still holding too, 1.1610-20. If this level breaks to the downside, expect a test of option barriers at 1.15. Overnight at-the-money straddles are trading just 50pts going into the NY session, suggesting the NFP numbers will be unexciting. Market also has 1.6bln EUR in option expiries between 1.1670-1.1700 to deal with today.

USD/JPY - Japanese Yen

Dollar-yen has held up amazing well this week despite a strong pullback in US yields. The market bounced strongly off technical support in the 113 area and it continues to hold its bid as the market remains optimistic for US tax reform. Today we have more option expiries to deal with, about $5bln between 113.80-114.50. Combine that with cheap overnight at-the-money straddles and the markets here are not expecting much either from the NFPs ahead.

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 Ryan Graham at 08:15 AM