USD trading quietly higher ahead of US & Canadian employment reports tomorrow

Summary

• USDCAD: Dollar/CAD is trading with a mixed to bid tone this morning as the broader USD trades quietly higher.  Yesterday’s bounce off key support at the 1.3300 level was much needed to thwart further selling pressure in our opinion, and it was rather interesting how a Facebook-induced selloff in the S&P futures during the afternoon helped the cause for USDCAD.  We now sit slightly above a narrow trend-line resistance channel in the 1.3350-60s ahead of what’s expected to be a quiet session.  Tomorrow morning is when it gets interesting once again for the market, as both the US and Canada will report employment data for the month of March.  We think USDCAD may hold its bid should we trade above this channel and drift a little lower should we trade below it, but we’re not expecting a whole lot of movement ahead of tomorrow.  Resistance today lies in the 1.3370s.

• EURUSD: Euro/dollar is slumping back this morning after Germany reported an abysmal Factory Orders print for the month of February (-4.2% vs +0.3% expected) and reports crossed about Italy potentially lowering its 2019 GDP forecast from +1.0% to just +0.1%.  Over 1.3blnEUR in options expire at the 1.1250 strike this morning.  We think the market could waffle around here between the 1.1210s and the 1.1240s ahead of the US employment report tomorrow.  We’ll have some Fed speak later today, with Mester speaking at 1pmET and Williams speaking at 4pmET.

• GBPUSD: Sterling is slipping lower today after traders failed on a 3rd attempt to rally above chart resistance in the 1.3170s over the last 24hrs.  Chart support in the 1.3130s is now stemming further selling.  The UK House of Commons voted 313-312 late yesterday to block a no-deal Brexit, which essentially forces Theresa May to go back to the EU yet again; this time to ask for another extension past April 12th.  All eyes are on Labour leader Jeremy Corbyn as well to see if he can reach a compromise with Theresa May on her Brexit deal.  Reuters has just reported that Labour party MPs are urging Corbyn not to insist on a 2nd public referendum.  We think the market could slip lower should the 1.3130s give way.  The next support levels are 1.3110, then the 1.3070s. 

• AUDUSD: The Aussie is struggling today to build upon yesterday’s move above the 0.7010s.  Late selling in the S&P futures knocked the market back below the level, and a combination of EURUSD and copper sales so far today are hindering rebound attempts.

• USDJPY: Dollar/yen traders are content to play within yesterday’s range as the broader USD trades quietly higher ahead of the US employment report tomorrow.  The S&P futures have now failed to surpass chart resistance at the 2886 level, which we think could weigh on broader risk sentiment here should US stocks not try to regain the level at the 9:30amET cash open.  Support today in USDJPY comes in the 111.30s while resistance remains in the 111.50s.  Almost 1blnUSD in options roll off at the 111.50 strike at 10amET.

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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.

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