*Good morning/afternoon everyone!* The U.S. dollar is trading lower against most of the major currencies this morning as risk appetite improves after yesterday’s brutal selling. Stock futures are up, helping to bolster pairs like EUR/USD and USD/JPY. However as we begin the NY session, the decline in Treasury yields could also tip the scale and push USD/JPY lower. Yen crosses on the other hand will take their cue from stocks today. The currency most vulnerable to weakness is the Canadian dollar because oil prices are down more than 2% after President Trump tweeted that he hopes Saudi Arabia and OPEC will not cut oil production because he thinks oil prices should be much lower based on supply. Despite a softer Eurozone ZEW survey, EUR/USD is trading above 1.1250 on the hope that progress could be made on the Italian budget front. the expectations component of the ZEW surely also increased. The best performing currency this morning is sterling which is up on higher wages (despite a higher unemployment rate) and continued Brexit optimism. On the Brexit front, we are getting closer to a deal but with some counterproductive headlines, traders are still reluctant to overload sterling positions but when an announcement is made, we can almost be assured that there will be a strong followup rally. AUD and NZD are also up from yesterday but having risen strongly in Asian trade, they are mostly consolidating and even weakening slightly. We also have our eyes on the Swiss Franc which appears to be topping below 1.0130. *The MAIN THEMES I see today are* +EUR +CHF -CAD -JPY *Trading Biases* +EUR, +CHF, +GBP, -CAD, -JPY mildly +AUD, +NZD, -USD *Today’s Initial Trades* Here’s the summary – 1. Buy EURCAD at 1.4885, Stop at 1.4857, Target 1.4912 2. Buy EURUSD at 1.1247, Stop at 1.1219, Target 1.1275 3. Buy AUDCAD at .9531, Stop at .9503, target .9559 4. Sell AUDCHF at .7270, Stop at .7298, Target .7242

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading lower against most of the major currencies this morning as risk appetite improves after yesterday’s brutal selling. Stock futures are up, helping to bolster pairs like EUR/USD and USD/JPY. However as we begin the NY session, the decline in Treasury yields could also tip the scale and push USD/JPY lower. Yen crosses on the other hand will take their cue from stocks today. The currency most vulnerable to weakness is the Canadian dollar because oil prices are down more than 2% after President Trump tweeted that he hopes Saudi Arabia and OPEC will not cut oil production because he thinks oil prices should be much lower based on supply. Despite a softer Eurozone ZEW survey, EUR/USD is trading above 1.1250 on the hope that progress could be made on the Italian budget front. the expectations component of the ZEW surely also increased. The best performing currency this morning is sterling which is up on higher wages (despite a higher unemployment rate) and continued Brexit optimism. On the Brexit front, we are getting closer to a deal but with some counterproductive headlines, traders are still reluctant to overload sterling positions but when an announcement is made, we can almost be assured that there will be a strong followup rally. AUD and NZD are also up from yesterday but having risen strongly in Asian trade, they are mostly consolidating and even weakening slightly. We also have our eyes on the Swiss Franc which appears to be topping below 1.0130.

*The MAIN THEMES I see today are*

+EUR
+CHF
-CAD
-JPY

*Trading Biases*

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

*Today’s Initial Trades*

Here’s the summary --

1. Buy EURCAD at 1.4885, Stop at 1.4857, Target 1.4912
2. Buy EURUSD at 1.1247, Stop at 1.1219, Target 1.1275
3. Buy AUDCAD at .9531, Stop at .9503, target .9559
4. Sell AUDCHF at .7270, Stop at .7298, Target .7242

Is Cable Topping  Out?

Is Cable Topping Out?

Chart Of The Day

Cable spiked to fresh post Brexit highs in early London trade today, but the rally lost its legs after UK Labor data missed its mark.

UK Claimant count expanded to 11.6K from 5K eyed while average earnings came in at 2.8% versus 3.0% forecast showing that wage growth remains tepid. The ILO unemployment rate however improved slightly to 4.2% from 4.3% projected. Overall the labor data news showed a slowdown in UK growth, but not to an extent that’s likely to prevent the BoE from hiking rates in May.

Cable has been on a one-way trip higher since the middle of last week, buoyed by EURGBP flows and upbeat sentiment about Brexit talks and the momentum in the pair remains strong irrespective of the data. Still, today’s news did not help the bulls as it clearly showed that UK economy is slowing which will make the task of normalization more difficult for BOE.

Today’s reversal and close near day’s lows also signals that bulls are tired and the pair may see more profit taking tomorrow especially if CPI data prints cooler putting the BoE rate hike in doubt. That could bring sterling all the way back to 1.4200

EURJPY – Topping Out?

EURJPY – Topping Out?

Chart Of The Day

EUR/JPY has enjoyed a fews days of rebound post the Brexit shock, but the risk sensitive currency cross may be reaching the top of its bounce. Tonight the market will get both the Tankan survey and the Chinese manufacturing PMI data which are likely to show further deterioration. In fact if the Chinese PMI prints below the key 50 boom/bust line for the first time in months its sure to trigger a drop in the pair as risk aversion flows would return.

But the yen part of the cross is not the only problem. The euro has been under selling pressure as well after reports that ECB may have to lower its credit standards for QE after the Brexit referendum as it simply does not have enough higher ranked credit to choose from. EUR/USD could slip to below 1.1000 if Asia session triggers further sell off in risk.

Technically EUR/JPY sees resistance at the 116.00 figure and support at 112.00 but it may run out of gas well ahead of those levels.

USD/CAD – Topping Out at 1.1000?

USD/CAD – Topping Out at 1.1000?

Chart Of The Day

Fundamentals

The Canadian dollar has not been able to muster much of a rally after its revised employment data last week that showed much better than expected job gains. If the labor do indeed signal a positive turn in economic activity up North then the loonie may be finally ready for a rally. Tomorrow the market will get a glimpse at the Canadian Retail Sales report and if the numbers beat the modest expectations of 0.3% jump then the loonie could pick up steam and move below the 1.0900 figure once again. However what could really make the pair fly is a dovish speech by Fed Chair Janet Yellen. After the FOMC minutes the market is primed for a more hawkish posture from Ms. Yellen but if she sticks to her neutral stance reaffirming the point that there is plenty of slack in the US economy, the dollar could dump and USD/CAD could make its way towards 1.0850

Technicals

Technically 1.1000 represents and strong intermediate term barrier for USD/CAD with the pair forming a double top at that level. A move through 1.0900 could open a test of 1.0850 while only a break above 1.1050 would reassert a bullish bias for the pair.

Is EUR/CAD Topping Out?

Is EUR/CAD Topping Out?

Chart Of The Day

Fundamentals

The euro has been in a one way trend against the loonie for the better part of the past nine months as the single currency continued to gain ground on the greenback while the Canadian dollar made a series of new lows. The weakness in the Loonie has been driven by market speculation that the BOC may be forced to lower rates yet again in order to stimulate the moribund Canadian economy. However, Governor Poloz has steadfastly maintained a neutral stance claiming that inflation is recovering and that economic activity is picking up as well. In tomorrow’s speech he is likely to reaffirm those themes providing further support for the loonie. Meanwhile inflation in Europe continues to decline to dangerously low levels. Today’s CPI data showed another downside miss to 0.7% from 0.8% eyed. The pressure on ECB to act will likely rise especially if the euro does not weaken and only exacerbates the situation on the price front. Therefore the euro could be vulnerable to a selloff as Mr. Draghi tries to talk it down and that could push EUR/CAD lower towards the 1.5000 level.

Technicals

EUR/CAD remains near the top of its range, but momentum has clearly stalled as 1.5500 represents a very stiff resistance for the pair. Meanwhile a break of the 1.5300 level opens up a run towards the 1.5000 support as the pair carves out a possible top.