FX markets quiet. UK parliament now prorogued until October 14.
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The move back above chart support in the 1.3150s late yesterday helped USDCAD crawl higher in the overnight session. Sellers were present at trend-line resistance in the 1.3180-90s however and they’re now seeing price follow-through to the downside following some better than expected Canadian Housing Starts data for August (+226.6k vs +215k expected and +222k in June) and some better than expected Building Permit data for July (+3.0% vs +2.3% expected and -3.1% previously). October crude oil prices continue their march higher this morning after the market decidedly broke out above the 56.60 resistance level yesterday, and we think this is weighing on USDCAD once again as well. Today’s session could be a dud as there’s nothing on the calendar until the weekly API oil inventory report at 4:30pmET. Perhaps time for some Trump tweets?
OCT CRUDE OIL DAILY
Euro/dollar continues to pivot around the 1.1040 level this morning, but with a bit more negative momentum compared to yesterday morning. There isn’t a whole lot going on in Euroland this morning, aside from another failed attempt by German bund sellers to get the benchmark yield above familiar chart resistance at the -0.57% level. EURUSD stalled just shy of trend-line chart resistance at 1.1070 yesterday and 1.1000 looks like support once again today. Expect more lackluster price action here as the main event comes on Thursday morning when the ECB announces its latest monetary policy update.
DEC GOLD DAILY
Sterling has seen some gyration in the overnight session. Buyers attempted another rally anchored off new chart support in the 1.2340s, but a swift wave of selling came in around the 3:30amET hour (perhaps related to a massive 1.8blnGBP option expiry at the 1.2300 strike this morning???). The UK then reported its latest employment report which showed much stronger than expected wage growth for the 3 months ending in July (+4.0% vs +3.7%) and this is arguably helping the market recover back above the 1.2340s. The UK’s parliament is now officially prorogued (on recess) until October 14th. So what could happen next? See here from Sky News.
The Aussie is pulling back a touch this morning after trend-line resistance in the 0.6870s is proving formidable. The market tried to get above this level in NY trade yesterday, but fell back below it by the close, and two attempts to regain it in overnight trade have been unsuccessful as well. We think this slight technical weakness, combined with lackluster price action in EURUSD and an 690mlnAUD option expiry at 0.6835 this morning, will be enough to invite some sellers back in here for the NY session today.
Dollar/yen ended NY trade yesterday on a strong note; closing well above the 107.00 chart level that has been a familiar battleground for the last few sessions. Traders have rising global bond yields to thank for that, with the US 10yr yield leading the way higher late yesterday. So what are bond markets saying at this point? Perhaps Jerome Powell disappoints markets again, in our opinion. The Fed chairman didn’t really give the rate cutting doves anything to go on last Friday, and now these traders have to stew on this until next Wednesday. USDJPY appears to be struggling at newly formed chart resistance at the 107.50 level as NY trade gets underway today, and so we’d be on the look-out for a dip here.
GERMAN 10YR BUND YIELD DAILY
Charts: Reuters Eikon
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