USD broadly higher to start holiday shortened session

SUMMARY

ANALYSIS

USDCAD

The dollar/CAD uptrend got a boost at the start of NY trade morning as US 10yr yields re-opened above 1.77% and drove the USD broadly higher, but the market is taking a slight hit here as Canada reported slightly better than expected GDP figures.  While the September numbers matched expectations of +0.1% MoM, the Q3 reading showed Canadian economic growth narrowly beating expectations (+1.3% YoY vs +1.2%).  With that, USDCAD has briefly dipped back below the 1.3300 handle.

The day is young though, as we like to say, and so let’s see if the USDCAD bulls can find some other reason to re-build long positions.  Watch US yields and the broader USD as usual, and perhaps even some developments on the USMCA front.  Liquidity will evaporate after the London close (11amET) and will get progressively worse as the day goes on.  Equity, interest rate, and FX futures markets will close early at 1:15pmET

USDCAD DAILY

USDCAD HOURLY

JAN CRUDE OIL DAILY

EURUSD

Euro/dollar is probing the 1.09 handle once again as US bond markets re-open with 10yr yields popping back above the 1.77% level.  The next major support level comes in at the 1.0970-80s, which is just below where the market sits right now.  Germany reported reduced un-employment figures for the month November earlier this morning (-16k vs +5k exp), but it had no effect on EURUSD as this data is not normally market moving.  We think the market remains under pressure here to close out the week.

EURUSD DAILY

EURUSD HOURLY

DEC GOLD DAILY

GBPUSD

Sterling has fallen back below the 1.2910s and into the 1.28 handle this morning after yesterday’s NY close proved to be very disappointing for the bulls.  The landslide, 68 seat majority, Tory election victory predicted by Wednesday night’s YouGov MPR poll was supposed to be bullish news for the market, and while it was for a brief while, GBPUSD fell back below its 1.2910s upside break-out level by the close of trade as other UK election polls begged to differ.  We think today’s negative price action is largely follow-through disappointment from yesterday’s poor NY close on the charts, plus some “maybe they were right to be skeptical yesterday” selling after PanelBase just announced the Tory lead slipping to just 8pts in their latest poll.  As we write, EURUSD is accelerating its losses into the 1.09 handle, and we don’t think this helps GBPUSD here either.  As we mentioned yesterday, we wouldn’t be surprised to see the market re-test the mid-1.28s before giving the bulls another shot at the upside.

GBPUSD DAILY

GBPUSD HOURLY

EURGBP DAILY

AUDUSD

The Aussie closed NY trade yesterday below the 0.6770s support level (which was a negative technical development), and while it tried to follow its antipodean cousin NZDUSD higher in Asia following some upbeat local consumer confidence news, the AUDUSD selling is back in full force this morning.  EURUSD’s foray into the 1.09s isn’t helping, nor is USDCAD’s rally above 1.3300.  Off-shore dollar/yuan continues to wrestle with the pivotal 7.0300 level, which if it regains with confidence could spell more trouble for the Australian dollar.

AUDUSD DAILY

AUDUSD HOURLY

USDCNH DAILY

USDJPY

The dollar/yen longs are showing no fear this morning, as the market takes out Wednesday’s highs in the 109.60s.  It’s been largely yield driven as US 10s rally back above 1.77%, but that move is going through some fits and starts.  Things could get very dicey later today as FX market liquidity will be very poor, with US interest rate and FX futures markets closing early at 1:15pmET.  Traders could use this an excuse to trip more buy stop orders up into the 110.00 level, or they could reverse the market lower (which would create a negative technical development on the charts).  The Friday after US Thanksgiving is not normally a pivotal day for markets, but given where we are on the USDJPY chart (teasing another upside breakout), today’s NY close could prove very important.

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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