Today’s Trades 01.30.2018 – USDJPY, EURCAD, EURGBP, AUDJPY

Swing

*Good morning/afternoon everyone!*

If the price action in the FX market on Monday can be characterized by consolidation, the last 12 hours is best described by the word volatility. The dollar rallied hard during the Asian trading session into Europe but collapsed sharply after the London open. It is trading heavily as the NY session begins but trying to recover its losses as pairs like EUR/USD appear to be topping while USDJPY and USDCAD appear to be bottoming. There’s been zero fundamental catalyst but for the past few weeks its lived up to its title of Turnaround Tuesday. We’re also nearing the end of the month and after some very strong moves in currencies, portfolio rebalancing could be affecting FX trade. Eurozone data was mostly in line with expectations with the EZ economy expanding by 0.6% in Q4. UK mortgage data was slightly weaker. Consumer confidence and house prices are scheduled for release this morning but the main focus will be this evening’s State of the Union Address by President Trump -- traders may look to unwind positions ahead of this big event.

*The MAIN THEMES I see today are*

+GBP
+USD
-AUD
-CAD

*Trading Biases*

+USD, +GBP
-AUD, -CAD, -NZD
mildly +EUR, +JPY (+USDJPY)
neutral CHF

*Today’s Initial Trades*

1. Sell AUDJPY at 87.98, Stop at 88.26, Target 87.70
2. Sell EURGBP at .8803, Stop at .8831, Target .8875
3. Buy USDJPY at 108.64, Stop at 108.37, Target 108.92
4. Sell AUDJPY at 87.98, Stop at 88.26, Target 87.70

Close ALL open day trades by 10:20AM NY / 15:20 GMT

EUR/CAD to Break 1.50, Head Towards 1.49

EUR/CAD to Break 1.50, Head Towards 1.49

Chart Of The Day

EUR/CAD to Break 1.50, Head Towards 1.49

For the Canadian dollar, all of the past week’s losses were recovered in one day on Friday on the back stronger than expected GDP and employment numbers. It was the best day for the loonie in more than 8 months and a large part of that has to do with how these reports will impact the Bank of Canada’s economic assessment next week. With more than 79K jobs added in the month of November, Canada experienced the strongest period of job growth in 4 years. Full time and part time work increased, driving the unemployment rate to its lowest level to its lowest level since February 2008. While GDP growth slowed in the third quarter, the robustness of the labor market and stronger than expected GDP growth in September completely overshadowed the report. The Bank of Canada has less to worry about in December than in October because everything from retail sales, to the labor market, housing market, manufacturing activity, trade and oil prices improved since the last meeting. The only area that deteriorated was inflation. While that is also a big focus for the BoC, we expect the Canadian dollar to trade higher into and possibly following the rate decision. We think its strength will be particularly pronounced against the euro which continues to struggle with political troubles. . German Chancellor Angela Merkel wants to form a coalition government with the Social Democrats but the leader of the SPD party denied talks.

Technically, EUR/CAD collapsed on Friday and such a strong move generally has continuation. At minimum we expect EUR/CAD to break 1.50 and hit 1.4960 but the sell-off could easily extend to the 50-day SMA near 1.4900.

Today’s Trades 11.27.2017 – USDJPY, EURGBP, EURCAD, AUDCAD

Swing

*Good morning/afternoon everyone!*

Currencies are off to a slow start this morning but with U.S. traders back from their long weekend holidays and the U.S. Senate poised to vote on tax reform, this should be an active and busy week for the FX market. We also have a confirmation hearing for Powell, a speech by Yellen, the BoE financial stability report and the possibility of Brexit headlines. The greenback is trading slightly lower across the board as yields give up early gains. This weakness softness should continue as long as there are no positive headlines on taxes this morning. New home sales are due for release and while we think the data could be stronger given the rise in existing home sales, the impact on the greenback should be limited. USD/JPY is very weak and a break of 11.00 would target the 110.50 area. The EUR/USD remains bid though 1.1950 could be a tough barrier to crack. Commodity currencies are stronger across the board and this outperformance is likely to continue in the NY session.

*The MAIN THEMES I see today are*

-USD
+EUR
+GBP
+CAD
+NZD

*Trading Biases*

-USD
+EUR, +GBP, +CAD, +AUD, +NZD
Neutral CHF

*Today’s Initial Trades*

1. Sell EURGBP at market now .8944, Stop at .8972, Target .8916
2. Sell USDJPY at market now 111.15, Stop 111.43, Target 110.87
3. Sell EURCAD at market now 1.5139, stop at 1.5167, Target 1.5111
4. Buy AUDCAD at .9691, Stop at .9663, Target .9719

Close ALL open day trades by 10:20AM NY / 15:20 GMT

Today’s Trades 11.21.2017 – EURUSD, EURCAD, EURJPY

Swing

*Good morning/afternoon everyone!*

Its a quiet morning for the euro, dollar and British pound which haven’t seen any major moves despite a pullback in yields. Today’s price action has been marked by mild recoveries in the commodity currencies but for the most part, currencies are marking their time. We still believe that the dollar will extend higher ahead of tomorrow’s FOMC minutes but we have 1 more day of trade (Wed) before prices grind to a halt. We also see further losses in the euro as Germany’s political troubles plague the currency. Today’s existing home sales report won’t have much impact on the dollar and Yellen doesn’t speak until after the NY close though we don’t expect the market to react strongly to her words either. AUD is supported by RBA Governor Lowe’s comments last night. NZD will be affected by today’s dairy auction while CAD could trade lower as NAFTA talks draw to a close.

*The MAIN THEMES I see today are*

-EUR
-GBP
+AUD
+CAD

*Trading Biases*

-EUR, -GBP,
+AUD, +CAD, +USD
mildly +NZD
neutral JPY, CHF

*Today’s Initial Trades*

1. Sell EURJPY at 131.97, Stop at 132.25, Target 131.69
2. Sell EURCAD at 1.5012, Stop at 1.5040, Target 1.4984
3. Sell EURUSD at 1.1723,, Stop at 1.1751, Target 1.1695

Close ALL open day trades by 10:20AM NY / 15:20 GMT

EUR/CAD Back to 1.50?

EUR/CAD Back to 1.50?

Chart Of The Day

EUR/CAD Back to 1.50?

The euro maintained a bid throughout the North American session leading some traders to wonder if we’ve finally seen a bottom. Its difficult to say as ECB President Draghi could easily talk the currency down on Tuesday by highlighting all of the reasons why policy needs to remain extremely accommodative but if there weren’t a speech on the horizon, we would say that euro is poised for a move to 1.1700 and higher. Aside from Draghi’s speech, Q3 GDP reports are scheduled for release from Germany and the Eurozone along with the latest ZEW surveys and slightly firmer euro supportive numbers are expected all around. The loonie on the other hand appears poised for further losses as NAFTA concerns grow. The 5th round of talks are being held in Mexico City this week and if you recall, the talks were very contentious during the fourth round. On a fundamental and technical basis, we believe the Canadian dollar will trade lower this week.

Technically, after consolidating for 5 straight days, Monday’s rally in EURCAD has taken the pair right to the 20-day SMA. While this may be a potential area of resistance, EUR/CAD breakouts tend to have strong continuation. If the pair breaks above 1.4875, taking out today’s high, we could see the rally extend as high as 1.50. There’s firm support near 1.4730, as that’s where recent lows and the 100/200-day SMAs hover.

Today’s Trades 11.08.2017 – EURCAD, EURGBP, EURJPY

Swing

*Good morning/afternoon everyone!*

With 10 year Treasury yields down nearly 1bp at one point this morning, the U.S. dollar is trading lower against most of the major currencies. Sterling is the only currency that is performing worst than the greenback because Gilt yields of the same period are down nearly 3bp on the back of a report that BoE agents see weaker investment growth over the next 2 years (no surprise with Brexit)! There are some Brexit talks today that could also affect sterling trade. There was no specific news to explain the USD’s weakness outside of last night’s softer Chinese trade balance which should have driven AUD and NZD lower but instead had greater impact on USDJPY. According to the Chinese government China’s economy still faces uncertainties which suggests that softer growth lies ahead. On North Korea, Trump’s warning to “not underestimate us. And do not try us” had very little impact on the market. The main event today is the RBNZ rate decision -- NZD is trading firmer ahead of the announcement. *I’ll be LIVE Trading it with you starting at 2:45pm NY (same daily webinar link).* We may also see some moves in the Canadian dollar with oil inventory, housing starts and building permits on tap.

*The MAIN THEMES I see today are*

-EUR
-USD
-GBP
+CAD

*Trading Biases*

-USD, -EUR. -GBP,
+CAD, +AUD, +JPY
neutral NZD, CHF

*Today’s Ideas*

1. Sell EURJPY at market now 131.74, Stop 132.02 Target 131.46
2. Sell EURCAD at 1.4783, Stop 1.4811, Target 1.4755
3. Buy EURGBP at .8838, Stop .8810. Target .8866

Cancel ALL pending orders by 3:30PM NY / 19:30 GMT / 5:30AM AEST
Close ALL open day trades by 4PM NY / 20 GMT / 6AM AEST

EUR/CAD Back to 1.45?

EUR/CAD Back to 1.45?

Chart Of The Day

EUR/CAD Back to 1.45?

There are 3 monetary policy announcements next week and only 2 are expected to be big market movers -- the European Central Bank and Bank of Canada rate decisions. EUR/CAD will be in play and a strong trend could emerge if these central banks surprise. For the past few weeks, investors have been positioning for balance sheet changes by the ECB and hawkish sentiment from the BoC but on Friday, there was talk the ECB may delay making changes until December and if that proves to be true, it would be exceptionally negative for the euro. If the Bank of Canada surprises with another rate hike after this past week’s strong GDP numbers, the Canadian dollar will soar and these cross dynamics could send EUR/CAD down to 1.45.

Technically, EUR/CAD ended the week with two very strong days of selling and this move has taken the pair to 2 month lows. The break below 1.4725, a previous support level opens the door to a move down to 1.46 and possibly even 1.45. EUR/CAD would need to rise back above 1.4850 to negate the downtrend in the pair.

EUR/CAD to Break 1.45?

Chart Of The Day

EUR/CAD to Break 1.45?

The euro rally came to a halt today on the back of softer Eurozone data and the recovery in the greenback. Manufacturing activity in the Eurozone slowed in the month of July, causing the PMI composite index to drop to 55.8 from 56.3. Service sector activity remained steady but that was not due to strength in the region’s 2 largest economies (France and Germany). Germany experienced slower growth all around and while service sector activity in France slowed, manufacturing activity accelerated. These are the first signs of the strains caused by a strong currency. With the PMIs falling short of expectation and investor confidence weakening (ZEW), we believe tomorrow’s German IFO report will add further pressure on the euro as businesses are the most sensitive to the exchange rate and the prospect of higher interest rates. In contrast, we believe the Canadian dollar could hold onto its gains and take another trip below 1.25. The loonie hit a fresh 14 month high on the back of stronger wholesale sales and the more than 1% increase in oil prices. While USD/CAD ended the NY trading session above the key 1.25 level, the 2016 low of 1.2461 is more significant support and we would not be surprised if USD/CAD drifted to that level before Friday’s Canadian GDP report.

Technically, EUR/CAD failed to break above 1.4700 last week, despite multiple attempts. This rejection of the 20 and 100-day SMA cross near 1.4680 puts the currency pair on track to test its 2 month low right above the 200-day SMA at 1.4450.

Sell EUR/CAD Rally

Sell EUR/CAD Rally

Chart Of The Day

Sell EUR/CAD Rally

There were a number of big takeaways from central bankers today. The first is that the ECB is not happy with the latest jump in the euro. They came straight out and said the market misjudged Draghi’s comments – he is not talking about raising interest rates and probably won’t edge the currency higher by discussing taper until the euro eases lower. It should be no surprise that the central bank of an export dependent region with low inflation would try to prevent excessive strength in their currency. So while euro could hit 1.14, we think it will start to retreat from there. Meanwhile Bank of Canada Governor Poloz said nothing to refute the optimism of his peers at today’s central bank conference. In many ways this could be interpreted as Poloz giving his blessing to the rise in the currency. BoC Deputy Governor Patterson helped explain why the central bank is growing less dovish, because they feel that the economic shock from oil is largely behind them. For this reason, we think CAD will hold onto its gains against the Euro and we want to sell into a rally.

Technically, there’s a lot of resistance in EUR/CAD between 1.4930-1.4950. Not only does the 20-SMA cross down into the 50-day SMA near that zone but the 38.2% Fib retracement of the 2015 to 2016 rally and the 50% Fib retracement of the 2016 to 2017 decline also converge near those levels. As such we believe this resistance will hold, with EUR/CAD eventually making its way back down to its June lows.

EUR/CAD to 1.46?

EUR/CAD to 1.46?

Chart Of The Day

EUR/CAD to 1.46?

The best performing currency this past week was the Canadian dollar which shot higher on the back of hawkish comments from the central bank. Senior Deputy Governor Carolyn Wilkins questioned the need for less stimulus, sparking talk of a rate hike for the first time in 7 years. With oil prices also rising, we expect further gains in CAD. In particular, we think the loonie will outperform the euro not only because 1.13 is a significant resistance level but also because next week’s Eurozone PMI reports are expected to be softer. Technically as long as EURCAD holds below 1.4850, there’s no major support in EUR/CAD until 1.4600.

EURCAD – Runaway to 1.5000?

EURCAD – Runaway to 1.5000?

Chart Of The Day

The gap open in the euro that blasted the pair through the 1.0900 level continues to exert its force higher even into what is likely to be a generally dovish ECB meeting this Thursday. In te meantime, the loonie has been hammered by the double whammy of weaker oil prices and a new set of tariffs against Canadian lumber just issued by the Trump administration.

Fears of a trade war with US biggest trading partner have some traders concerned that USDCAD could push towards the key 1.4000 level as capital flees from the Great White North. Even without any additional tension, the slow drift lower in oil could hurt the loonie for the foreseeable future.

All of which is creating a very powerful rally in EURCAD that could see the cross hit the key 1.5000 mark within the next few days. A runaway gap is a rare technical formation but when it occurs it can lead to powerful rallies that could last for days. EURCAD continues to exhibit all signs of such a setup.

EUR/CAD to 1.46?

EUR/CAD to 1.46?

Chart Of The Day

EUR/CAD to 1.46?

The euro also came under selling pressure today as investors realized that Deutsche Bank’s lower settlement deal with the U.S. Department of Justice is not real. There was a media report on Friday that said they reached an agreement to lower the penalty to $5.4 billion from $14 billion and while talks are underway investors there’s been no official deal. The problem now is that a lower number has now been thrown out there so if the actual settlement is higher and closer to $10 billion, the euro could still be punished and for this reason along with the ongoing banking crisis in Europe, we believe the euro will underperform. In contrast, the Canadian dollar extended its gains as oil prices pressed higher. Fundamentally, we believe that oil has bottomed and the CAD following the OPEC deal. It’s a busy week in Canada but we don’t have any major economic reports until Friday so fundamentally we could see further pressure on EUR/CAD.

Technically today’s high in EUR/CAD coincided with the 200-day SMA – an important indicator that has previously served as support and resistance for the pair. We believe this level should hold and EUR/CAD should find its way back down to the 50-day SMA at 1.4610. If EUR/CAD breaks above the 200-day SMA near 1.4750, the 50% Fibonacci retracement of the 2008 to 2012 sell-off should cap gains.