Dollar/CAD had a rough session yesterday and it all started with weaker than expected economic data out of the US. While Canadas somewhat soft CPI figures for April saw the market knee jerk higher at the start of NY trade, much weaker than expected US Retail Sales and Industrial Production numbers for April then saw USDCAD reverse lower. Talk from the Whitehouse about President Trump planning to delay tariffs on auto imports then led to a wave of risk-on which saw the USD get broadly sold. Chart support in the 1.3450-60s quickly came under attack, and the subsequent oil market rally that followed a less bearish than expected EIA inventory report invited more selling. The NY close yesterday below the 1.3440s wasnt good technically for USDCAD longs, and we think this is part of reason why weve seen the market extend south in overnight trade today. Reports are making the rounds over the last 12hrs that Canada, Mexico and the US are close to clinching a deal on steel tariffs, a while we think this is adding to some of the negative USDCAD momentum, we think broad USD risk-on/risk-off flows are the more dominant factor right now for the market. Canada just reported its Manufacturing Shipments data for the month of March and they beat expectations (+2.1% MoM vs +1.5%). We think yesterdays price action has now muddied the technical outlook for USDCAD heading into weeks end, and we would not be surprised to see the market range trade here for a bit. The Bank of Canadas Stephen Poloz will be holding a press conference this morning at 11:15amET following the release of the central banks annual Financial System Review. Morehere.
JUN CRUDE OIL DAILY
Euro/dollar benefitted handsomely yesterday from speculation that the Trump administration was planning to delay tariffs on European auto imports. The market shot up to chart resistance in the 1.1220s, but then stalled. Another attempt was made by traders to get above this level in early European trade today but this has failed. Therefore, were seeing some selling re-enter here since the 5amET hour. The US has just reported its Housing Starts figures for the month of April and its Philly Fed survey for May, and both reports beat expectations (+1235k starts vs +1209 expected, and 16.6 vs 9.0 expected for the Philadelphia business outlook). We think this positive US data will put EURUSD back on the defensive today.
Sterling cant catch a break today as the EURGBP cross continues its march higher following yesterdays breakout above the 0.8680s. Brexit uncertainty continues to cause GBP to underperform its G7 peers, and it doesnt look like its going to get any better today as Theresa May is expected to face further pressure from the 1922 Committee to quit as soon as possible. Chart support in the 1.2820s has now given way, which in our opinion now opens up the door for a retest of the February 2019 lows in the 1.2770s.
Australia reported its April employment report last night, and while the headline job gain beat expectations (+28.4k vs +14k), more than all of it was part-time jobs and the unemployment rate rose as well (5.2% vs 5.1% expected). This saw AUDUSD drop quickly below the 0.69 handle, but cooler heads seemed to prevail and the market was actually able to recover a bit when EURUSD traders made an attempt to get above the 1.1220s. Since this EUR rally attempt failed however, weve since seen that market come off again and so too has AUDUSD. Chart resistance today for the Aussie lies in the 0.6930s. We think a close above this level would form a bullish reversal candle for today, and could lead to some fund short covering heading into next week. Conversely, failure to get above this level will likely keep the pressure on here.
JUL COPPER DAILY
Dollar/yen is enjoying a bid this morning as the S&P futures creep back above trend-line resistance in the 2840s. One could argue that todays equity market optimism is a bit odd considering the signing of Trumps new executive order last night which now effectively bars Chinas Huawei from the US. Chinas commerce ministry was also out earlier today with some more tough talk, saying that China will never make concessions on important matters of principle and that China will have to take necessary countermeasures should the US continue with its bullying, maximum pressure, tactics on trade. We think USDJPY traders may finally try to fill the Sunday opening gap today, which resides at 109.85-95. Over 1.2blnUSD in options will be expiring at 10amET at the 110.00 strike as well.
S&P 500 DAILY
Charts: TWS Workspace
Interested in creating a custom foreign exchange trading plan?Contact usor call EBC's trading desk directly at1-888-729-9716.