US yield rally continues. Canadian employment report out next.

SUMMARY

ANALYSIS

USDCAD

Dollar/CAD is tormenting the fund shorts this morning with a possible break above the 1.3180-90s as US yields resume their “everything is fine” rally, but it looks like some positioning adjustment ahead of the Canadian employment report at 8:30amET is seeing the market pull back a tad now.  The expectations for this morning’s numbers are +15.9k jobs created in October, wage growth of +4.2% YoY, and an unemployment rate of 5.5%.  A weak report will likely see USDCAD shoot higher to the 1.3220-30s at least.

USDCAD DAILY

USDCAD HOURLY

DEC CRUDE OIL DAILY

EURUSD

Euro/dollar continues to fall today as US/China trade deal optimism reaches a fever pitch.  Forget yesterday’s Reuters headline about the “White House plan to rollback China tariffs faces fierce internal opposition” which saw risk assets take a dip late in the session.   The White House is now “very, very optimistic” about reaching a trade deal with China soon.  See here.  US 10yr yields are attacking the 1.95% handle once again and December gold futures have taken out yesterday’s NY lows in the 1460s.  All this is weighing on EURUSD as NY trade gets underway.  We think the market could slip further to the 1.0990-1.1000 level should it not regain the 1.1030s quickly.  The US reports its preliminary November University of Michigan sentiment survey at 10amET this morning and the expectation is for 95.9.

EURUSD DAILY

EURUSD HOURLY

DEC GOLD DAILY

GBPUSD

Sterling continues to struggle today as the weight of yesterday’s dovish Bank of England meeting remains on trader minds.  We’re also seeing broad demand for USD this morning, which continues to be driven by the rout in global bond markets.  Chart support in the 1.2790-1.2800 continues to hold for now, but if it doesn’t we think there’s a risk for a sizable drop for GBPUSD to the low 1.27s.

GBPUSD DAILY

GBPUSD HOURLY

EURGBP DAILY

AUDUSD

The Australian dollar is got knocked back below the pivotal 0.6895 in Asian trade last night after the RBA released its quarterly Statement on Monetary Policy.  Full report here.  In our opinion, it reads a bit more dovishly than the RBA’s monetary policy statement from earlier this week, especially with the “prepared to ease further” language.  With that, AUDUSD has since been attacking Wednesday’s chart support levels in the 0.6870s and the 0.6860s.  With the broad demand for USD now underway though because of rising US yields, we think the selling could intensify.

AUDUSD DAILY

AUDUSD HOURLY

USDCNH DAILY

USDJPY

Dollar/yen is following US 10yr yields as usual this morning, but both markets have yet to take out their NY highs from yesterday.  Perhaps this acts as the near term pivot for both markets heading into this morning’s UofM survey at 10amET?  We find today’s recovery in USDCNH (decline in the Chinese yuan) as quite notable.  We think a move back above the 6.99 level would be technically positive and could foreshadow a negative US/China trade headline to come.

USDJPY DAILY

USDJPY HOURLY

US 10YR BOND YIELD DAILY

Charts: Reuters Eikon

About the Author

Erik Bregar - Director, Head of FX Strategy

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.

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