1-888-998-3948


Wednesday, June 12, 2019

Fed rate cut trade now looking for soft US May CPI figures to support

Fed rate cut trade now looking for soft US May CPI figures to support
Source: Powered by Exchange Bank of Canada – www.ebcfx.com/news

 

Ready to innovate your global payments? Learn more about CXI FX Now or call our trading desk directly at 1-833-572-8933.

Get real-time market coverage on twitter at @EBCTradeDesk or sign up here.


SUMMARY

Traders expecting +1.9% YoY & +2.1% ex food and energy.
Crude oil continues lower after bearish APIs.  Weekly EIA report out at 10:30amET.
European 5y5y inflation swap trades to new record lows, doesn’t help ECB.
Boris Johnson not aiming for no-deal Brexit.
Over 1.1blnUSD in options expiring in USDCAD at 1.3275 this morning.
Australia reports its May Employment report tonight at 9:30pmET.
 

 

ANALYSIS

USDCAD

Dollar/CAD sits smack between chart support in the 1.3270s and chart resistance just above 1.3300 this morning as traders await the much anticipated US May CPI report at 8:30amET.  The expectation is for +0.1% MoM / +0.2% ex food and energy, and +1.9% YoY / +2.1% ex food and energy.  This upcoming report comes after the US reported slightly softer than expected producer price inflation yesterday, and will likely need to match/fall short of the consensus estimate in order to re-fuel the Fed rate cut trade heading into next week.  July crude oil prices are falling 2.8% this morning after the API reported another build in weekly oil inventories versus expectations for a draw, and we would say this is helping USDCAD at the margins as we head into NY trade.  The EIA will report its weekly inventory number at 10:30amET, with traders now looking for a build of 0.1M barrels.  Over 1.1blnUSD in options expire at the 1.3275 strike at 10amET this morning, which could keep USDCAD anchored to current levels.

 

USDCAD DAILY

USDCAD DAILY

USDCAD HOURLY

USDCAD HOURLY

JUL CRUDE OIL DAILY

JUL CRUDE OIL DAILY

 


 

EURUSD

There’s not a whole lot going on in the Euro this morning as traders await the US CPI figures.  The market crawled above trend-line resistance in the 1.1320s yesterday afternoon, but slipped back below it in early European trade today.  There’s much talk this morning about the Euro 5y5y inflation swap and how it has now fallen to a record low of 1.1950%.  This will not help the ECB's credibility with regard to their inflation forecasts we feel.  Mario Draghi’s opening remarks at an ECB event in Frankfurt this morning didn’t produce any monetary policy-related headlines.  Dollar/yuan is trading steady above chart support in the 6.9220s after losing and regaining the level earlier.  According to the latest from Chinese Global Times editor Hu Xijin (now deemed as a mouthpiece for the Chinese state), “From information I have access to, there is no sign that China is relaxing its countermeasures against US trade war. Chinese basically have no trust in the mild signals the US side sent occasionally. Will there be a breakthrough at G20? I dare not be optimistic at this moment.”  Over 1.2blnEUR in options expire at the 1.1350 strike this morning.

 

EURUSD DAILY

EURUSD DAILY

EURUSD HOURLY

EURUSD HOURLY

USDCNH DAILY

USDCNH DAILY

 


 

GBPUSD

Sterling is trading higher this morning after the market put in a decent NY close above chart support at the 1.2700 level yesterday.  We think the continued inability for EURGBP to hold the 0.8900 level has proven beneficial and we think Boris Johnson’s comment about not aiming for a no-deal Brexit, as he officially launched his leadership campaign today, is helping broad GBP sentiment.  Chart resistance comes in at the 1.2750s, then the 1.2770s today.  All eyes on now are the US CPI figures.

 

GBPUSD DAILY

GBPUSD DAILY

GBPUSD HOURLY

GBPUSD HOURLY

EURGBP DAILY

EURGBP DAILY

 


 

AUDUSD

The Aussie continues to drip lower as traders await key US inflation data at 8:30amET.  Last night’s weak Westpac Consumer Confidence figures are not helping with regard to AUD sentiment.  More here.  July copper is losing 0.9% this morning amid a broad absence in risk appetite.  Australia will report its May Employment report tonight and the expectation is for 17.5k new jobs and 5.1% on the unemployment rate.  We think Monday’s swift reversal of Friday’s bullish breakout attempt has hurt the chart technicals for AUDUSD here.

 

AUDUSD DAILY

AUDUSD DAILY

AUDUSD HOURLY

AUDUSD HOURLY

JULY COPPER DAILY

JULY COPPER DAILY

 


 

USDJPY

Dollar/yen traders have now completely filled the market’s Sunday opening gap this morning amid broadly higher bond and gold prices, and after the market closed NY trade yesterday below chart support in the 108.50s.  Over 1blnUSD in options expire at the 108.00 strike this morning at 10amET after the US reports its CPI numbers for May.  
 

USDJPY DAILY

USDJPY DAILY

USDJPY HOURLY

USDJPY HOURLY

AUG GOLD DAILY

AUG GOLD DAILY

Charts: TWS Workspace


About the Author

Erik Bregar

Erik Bregar - Director, Head of FX Strategy

linkedin twitter

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.

About Currency Exchange International
Currency Exchange International, CXI, is the leading provider of comprehensive foreign exchange services, risk management solutions and integrated international payments processing technology in North America. CXI’s relationship-driven approach ensures clients receive tailored solutions and world-class customer service. Through innovative and trusted FX software platforms, CXI delivers versatile foreign exchange services to our clients, so that they can efficiently manage and streamline their foreign currency and global payment needs. CXI is a trusted partner among financial institutions, corporations and retail markets around the world. To learn more, visit: www.ceifx.com

Disclaimer: All product names, logos, and brands are property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, logos, and brands does not imply endorsement.

This publication has been prepared by Currency Exchange International for informational and marketing purposes only. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable, but no representation or warranty, express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as a representation for which Currency Exchange International, its affiliates or any of their employees incur any responsibility. Neither Currency Exchange International nor its affiliates accept any liability whatsoever for any loss arising from any use of this information. This publication is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any of the currencies referred to herein, nor shall this publication be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The general transaction, financial, educational and market information contained herein is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a "call to action" or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. You should note that the manner in which you implement any of the strategies set out in this publication may expose you to significant risk and you should carefully consider your ability to bear such risks through consultation with your own independent financial, legal, accounting, tax and other professional advisors. All Currency Exchange International products and services are subject to the terms of applicable agreements and local regulations. This publication and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced in whole or in part, or referred to in any manner whatsoever nor may the information, opinions and conclusions contained in it be referred to without the prior express written consent of Currency Exchange International.
Posted By Mandee Myers at 08:15 AM
comments powered by Disqus

Platinum Passport

Travelers: Never miss a thing and be the first to know about CXI branch promotions, travel tips and hot trends.

Currency Insider

Corporations & Financial Institutions: Want to get ahead of the curve for the upcoming week? Get CXI's currency market trend analysis sent directly to your inbox weekly.