Broader USD sees pressure ahead of US CPI report
Erik Bregar of Exchange Bank of Canada - InsideFutures.com - Fri Jan 11, 7:53AM CST
Summary
  • USDCAD:Dollar/CAD is slipping lower again this morning after yesterday attempt to trade above the 1.3240s failed. A rising crude oil price was the culprit yet again, and these gains continue this morning; with the February WTI contract now toying with a trend-line level near $53/barrel. The broader USD is seeing another wave of selling today after Jerome Powell reiterated the Feds ability to be patient and flexible on rate policy when he spoke yesterday. USDCNH has broken chart support in the 6.76-6.77s. The Aussie is shooting higher once again. Sterling has vaulted higher (albeit for its own reasons). All this is keeping pressure on USDCAD at the moment, but we have the possibility for an inflection point ahead with the release of the US December CPI data at 8:30amET. Traders are expecting +2.2% YoY and -0.1% MoM on the headline, and +2.2% YoY and +0.2% MoM on the core measure. We think the market could take another stab at bottoming today if the 1.3220s can be surpassed to the upside and broad USD selling/oil buying takes a break.

  • EURUSD:Euro/dollar is inching higher today after the market probed for buyers yesterday and found them at trend-line support in the 1.1480s. Gains in the EUR however are lagging the rest of the G7 FX space as another slew of options expire at the 1.1500 strike this morning (2.5blnEUR). Weve also seen some downbeat comments on German growth from the ECBs Nowotny cross the wires. Chart resistance today is 1.1540-1.1560. We think EURUSD trade could be choppy today if the US CPI figures doesnt spur more broad USD selling.

  • GBPUSD:Sterling is grabbing headlines this morning after the Evening Standard reported that a Brexit delay beyond March 29th looks increasingly likely, and they cited UK cabinet ministers on the matter. More here. This saw a quick pop higher in GBPUSD after the UK reported weak manufacturing production and ok GDP figures for November. A UK government spokesperson has come out to reaffirm that Theresa May is opposed to all this, and weve seen the market pull back a little bit. Chart resistance in the 1.2790-1.2810 area now becomes support. The EU is reportedly planning to produce assurances on the Irish backstop on Monday, just 24hrs before the meaningful Brexit vote in UK Parliament.

  • AUDUSD:The Aussie is enjoying another rally today Australian Retail Sales beat estimates and the Chinese yuan continued higher in overnight trade. Were seeing some selling enter the fray now however as chart resistance in the 0.7230s and a headline from the PBOC sparks some broad USD buying (PBOC Wary Of Further Yuan Appreciation BEIJING -- MNI). We think the market finally takes a breather here from its spectacular reversal higher over the last week.

  • USDJPY:Theres very little going on in USDJPY today as the market shakes off broad USD selling and the offered tone to US equity futures this morning. Futures traders liquidated 2477 contracts in positions yesterday. We think a bit of range trade will persist here until we break 107.80 to the downside or 108.50-60 to the upside. Japanese markets will be closed on Monday for the Coming-of-Age Day holiday. Japan reports November Machine Order data next Tuesday night ET.

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MARKET ANALYSIS CHARTS

USD/CAD DAILY CHART

USD/CAD HOURLY CHART

FEBRUARY 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

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Erik Bregar - Director, FX Trading
Exchange Bank of Canada
Toronto, Ontario
Email:erik.bregar@ebcfx.com
Phone:888-729-9716

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