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


2018-02-27 08:15

USD steady ahead of Fed Powell's testimony before congress. Text of speech to be released 8:30am. Hearing commences 10amET.

Source: EBC Trading Desk

Summary

  • USDCAD: Markets are in wait-and-see mode as all eyes will be fixated on Jerome Powell’s debut performance on capitol hill today.  The text of his speech will be released at 8:30am, and then at 10am we’ll hear the new Fed chairman speak before the House Financial Services Committee.  While there’s potential for the Fed to move markets today, we would caution that with “what incentive does Powell have to rock the boat here, especially considering it’s his first major speech as Fed chair?”  We think Powell will be a little “Yellen-esque” today, we think he’ll reiterate the Fed’s position communicated from its last meeting, and we think he’ll try to strike a balanced tone (positive about the economy but concerned about inflation/shocks).  With that, we think markets might be a little less directional than traders are hoping for.  USDCAD is trading slightly higher than the NY close at this hour, but it very much remains in the 1.2660 to 1.2715-25 range we talked about late yesterday.  EURCAD and GBPCAD are not looking great at this hour (EURCAD running into technical resistance at 1.5650, and GBPCAD is struggling to maintain the 1.57s after a bearish intra-day reversal yesterday).  The broader USD is mildly higher however, and that’s helping to keep USDCAD somewhat bid here.  Also on deck at 8:30amET is the US January Trade Balance (-72.3bln expected) and US January Durable Goods (-2.0% expected).  Just before Powell speaks at 10am, we’ll also get US February Consumer Confidence (markets expecting a read of 126).  If that’s not enough for one day, traders will also be watching what Finance Minister Bill Morneau says when he releases Canada’s next federal budget at 4pmET.

  • AUDUSD: Aussie traders continue to mark time as well ahead of the busy US calendar today.  As mentioned late yesterday on our Twitter feed, yesterday’s recovery off 0.8730 cemented an overnight trading range of 0.7830-0.7880, which is still in effect for early NY trade today.  So goes the EURUSD, so goes the AUDUSD today we feel.  Copper is off 0.6% today and that’s hurting AUDUSD a tad, but we’re still very much stuck in a range at this hour.

  • EURUSD: The range in EURUSD is getting tighter and tighter as the NY session draws nearer.  Support lies at 1.2300, then 1.2275, then 1.2230.  Resistance is at 1.2325, then 1.2350-60, then 1.2410.  EURJPY (often a big influence on EURUSD) failed twice above 132 in the overnight session, which is not a great sign for EURUSD.  USDCNH (which exhibits a tight inverse correlation with EURUSD) also firmly regained the 6.30 level in late Asian trade, which is another not so great sign for EURUSD at this hour.  The day is young though and there’s a lot of news ahead.  All eyes will be on Powell for the most part.

  • GBPUSD: Sterling, while range-bound like most of the other major currencies at this hour, is exhibiting a bit more downward momentum given yesterday’s plunge back below 1.4000.  With that,  GBPUSD is hugging the bottom end of the range we spoke about late yesterday, 1.3950-1.4015.  EURGBP continues its march higher (now well above 0.8800) and that’s hurting GBP momentum at this hour as well.  Should current support at 1.3950 give way, we would not be surprised to see a move lower to 1.3915-1.3925.  Should that give way, it’s a pretty big drop to the next support level, which is 1.3860-70.

  • USDJPY: Dollar/yen has done literally nothing in overnight trade; moving back and forth in a 30pt range.  The Nikkei and US stocks put in another strong performance yesterday, but it’s still not really helping USDJPY (market still cannot breach Monday’s opening high of 107.15.  Broad JPY buying seems to be the culprit here (take a look at EURJPY and GBPJPY).  Support in USDJPY remains at 106.60-70.  Resistance is at 107.40-60.  Again, all eyes are now on Powell.

Market Analysis Charts

USD/CAD Chart

AUD/USD Chart

EUR/USD Chart

EUR/CAD Chart

EUR/GBP Chart

EUR/JPY Chart

GBP/USD Chart

GBP/CAD Chart

USD/JPY Chart

USD/CNH Chart

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 Monica Bermudez at 08:15 AM