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Wednesday, July 10, 2019

All eyes on Powell at 10amET. Text of testimony to be released at 8:30amET.

All eyes on Powell at 10amET.  Text of testimony to be released at 8:30amET.
Source: Powered by Exchange Bank of Canada – www.ebcfx.com/news

 

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SUMMARY

Bank of Canada interest rate decision and Monetary Policy Report at 10amET as well.  Press conference at 10:15amET.
USDCAD overnight options pricing predicting 70-80pt intra-day range.
August crude 2% higher after weekly API reports shows larger than expected oil inventory draw.
Weekly EIA oil inventory report at 10:30amET.  Fed’s Bullard speaks at 1:30pmET.  FOMC Minutes at 2pmET.
Global bond yields continue to show anxiety ahead of Powell.  US 10s back up to 2.10%.  German bunds back to -0.30%.
UK May Industrial Production and Manufacturing Production figures miss expectations.  UK May GDP comes in +0.3% MoM.
 

ANALYSIS

USDCAD

Dollar/CAD sits at familiar chart resistance in the 1.3120-30s this morning as the broader USD enters a lull ahead of a huge day of news.  First up will be the text of Jerome Powell’s speech before the US House Financial Services Committee (to be released at 8:30amET).  The Fed chairman will then begin speaking at 10amET.  The 10am hour will also feature the Bank of Canada’s latest interest rate decision, following by a press conference at 10:15amET.  The weekly EIA oil inventory report comes next at 10:30amET, where traders will be expecting a similar draw to what the API reported last night.  The Fed’s Bullard will be speaking at 1:30pmET and finally we’ll get the Minutes from the last Fed meeting at 2pmET.  Global bond markets continue to exhibit anxiety ahead of Powell, by virtue of US 10yr yields bouncing to 2.10% and German bund yields bouncing to -0.30%, but we think there’s a good chance the “Fed rate-cut trade” can recover here should the Fed chairman deliver dovish, or even confusing testimony.  The Bank of Canada is expected to keep rates on hold and to talk up the Canadian economy.  The key, in our opinion here, is how “negatively” Stephen Poloz describes what’s going on globally with trade uncertainty.  We think an even more cautious tone could spook the funds, who have just recently flipped to a net short position in USDCAD.

 

USDCAD DAILY

USDCAD DAILY

USDCAD HOURLY

USDCAD HOURLY

AUG CRUDE OIL DAILY

AUG CRUDE OIL DAILY

 


 

EURUSD

Rising bund yields seemed to caring EURUSD back above the important 1.1200 support level in early European trade today but trend-line chart resistance in the 1.1220s is capping as we head into NY trade.  With momentum now swinging downward ahead of Powell, we have to wonder if the Fed chairman will try to kill the rate cut doves here.

 

EURUSD DAILY

EURUSD DAILY

EURUSD HOURLY

EURUSD HOURLY

AUG GOLD DAILY

AUG GOLD DAILY

 


 

GBPUSD

Sterling is rebounding this morning as well as UK 10yr gilt yields bounce higher to +0.78%.  Today’s weaker than expected Industrial Production and Manufacturing Production figures out of the UK for May were far from positive (+1.4% MoM vs 1.5% exp and +1.4% MoM vs +2.1% exp respectively).  The UK reported May GDP in line with expectations of +0.3% MoM, which seemed to be a non-event for traders.   We think today’s move so far has more to do with pre-Powell positioning.

 

GBPUSD DAILY

GBPUSD DAILY

GBPUSD HOURLY

GBPUSD HOURLY

EURGBP DAILY

EURGBP DAILY

 


 

AUDUSD

The Aussie is finding itself in a bit of trouble this morning, technically speaking, after the 0.6930-40 support level gave way in NY trade yesterday.  Last night’s awful Westpac Consumer Confidence reading for July (-4.1% vs -0.6% for June) follows the weak NAB survey from the day before, and is not doing wonders for AUD sentiment in our opinion.  A dovish Powell needs to come to rescue for AUDUSD here, otherwise we could see the fund shorts take charge again and push this market below the 0.6900 level.

 

AUDUSD DAILY

AUDUSD DAILY

AUDUSD HOURLY

AUDUSD HOURLY

SEP COPPER DAILY

SEP COPPER DAILY

 


 

USDJPY

Dollar/yen continues its drift ever so slightly higher this morning as global bond yields continue to reflect some angst that Powell will not be a dovish as he was at the last Fed meeting.  We think Fibonacci chart resistance at the 109.05 level gets tested to the upside today and we think this level will become the pivot for price action for the rest of the week.

 

USDJPY DAILY

USDJPY DAILY

USDJPY HOURLY

USDJPY HOURLY

DEC 3-MONTH EURODOLLARS DAILY

DEC 3-MONTH EURODOLLARS DAILY

Charts: TWS Workspace


About the Author

Erik Bregar

Erik Bregar - Director, Head of FX Strategy

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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.

 

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Posted By Mandee Myers at 08:15 AM
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