USD trades broadly lower to start week

Summary

• USDCAD: Dollar/CAD is trading with an offered tone as the broader USD retraces its post NFP gains from Friday in an otherwise quiet start to the week.  May crude oil continues to trade bid, after breaking above the $63 mark late last week, gold prices have nudged above chart resistance in the 1298s, and the S&P futures are slightly weaker on the session so far.  The leveraged funds at CME added to their net long USDCAD position during the week ending April 2 by adding new longs.  We think this underscores how important the 1.3300 support level is at this point in the uptrend we’ve observed since the beginning of March.  This week’s calendar will be less exciting, with just the US March CPI and FOMC Minutes being the key features at mid-week.  The only Canadian data items this week were just released: March Housing Starts (+192.5k vs +194k exp) and February Building Permits (-5.7% MoM vs +2.0% exp).  We think USDCAD tests the resolve of longs a little bit here before making another attempt higher.  Chart support today comes in at the 1.3330-50s.

• EURUSD: Euro/dollar is drifting higher this morning as the market seems to want to test the resolve of the leveraged fund net EUR short position, which expanded to a new 32 month high during the week ending April 2nd (if we look at the CFTC’s COT report released late Friday).  Aside from this, there haven’t been any major headlines out of the US, Europe or China to spur price action to start the week.  This week’s European calendar features the ECB policy meeting on Wednesday and another press conference from Mario Draghi, which has tended to hurt EURUSD (if we look at the market’s response going back to the last 3-4 ECB press conferences).  Traders will also be watching Italy’s February Retail Sales figures (tomorrow), Italy’s February Industrial Output numbers (Wednesday), Germany’s March CPI figures (Thursday) and the Eurozone February Industrial Production data (Friday).  We think the market may drift to as high as the 1.1270s early this week should trend-line support in the 1.1230s hold.

• GBPUSD: Sterling has been drifting lower ever since the 1.3070s resistance level capped GBPUSD prices and the 0.8590s supported EURGBP prices in Asian trade overnight.  The clock continues to tick down ahead of this Friday’s Brexit deadline (April 12).  An emergency EU summit will take place this Wednesday and it’s being reported this morning that Theresa May will travel to Berlin to meet Angela Merkel ahead of it.  Germany is one of the staunch supporters in avoiding a no-deal Brexit.  Markets are expecting Theresa May to ask for a short extension to June 30th (as was reported last week).  The UK reports its February Manufacturing Production, Industrial Production and Trade Balance figures on Wednesday.  The funds added to both long and short positions during the week ending April 2nd, leaving the net short GBPUSD position more or less unchanged at 10 month lows.

• AUDUSD: The Australian dollar is looking upward bound this morning after buyers stepped in at trend-line support in the 0.7090s overnight.  May copper prices have finally regained the 2.92 level since giving up the support level in Friday’s session.  With AUDUSD now breaking back above the 0.7105 level and EURUSD looking bid, we think the market may want to test the resolve of the leveraged fund net short position here as well (which grew to 55.7k contracts during the week ending April 2nd).  Australia reports its Westpac Consumer Confidence data for April tomorrow night.  The RBA’s Debelle will be speaking twice this week (tomorrow and Wednesday night) and the Financial Stability Review (released twice a year by the RBA) will be released on Thursday night.

• USDJPY: Dollar/yen is having a bit of a rough start to the week after Friday's price action showed massive indecision post US payrolls and the Nikkei swiftly reversed lower in Asian trade today.  Reuters cited profit taking ahead of the next Japanese corporate earnings season.  Friday’s chart support in the 111.60s gave way in USDJPY.  Rebound attempts above trend-line resistance in the 111.40s have failed three time this morning in European trade.  We think USDJPY could very well attack support in the 111.30s today should US stocks trade lower at the cash open.  The next support level comes in at the 111.10s.  The leveraged funds at CME added marginally to their net long USDJPY position during the week ending April 2nd.

Tune in @EBCTradeDesk for more real-time market coverage.

Market Analysis Charts

USD/CAD Daily Chart

USD/CAD Hourly Chart

May 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

May Copper Daily Chart

USD/JPY Daily Chart

USD/JPY Hourly Chart

June S&P 500 Daily

Charts: TWS Workspace

About the Author

Erik Bregar - Director, FX Trading

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 CXI's trading desk directly at 1-833-572-8933.