USDCAD bid ahead of Canadian Retail Sales report. Slew of Federal Reserve member speeches to follow.

Summary

• USDCAD: Dollar/CAD is hugging a trend-line level in the 1.3210s this morning as traders await the latest read on Retail Sales out of Canada.  Market participants are expecting a -0.3% read for December, after a decline in November of -0.9%.  Yesterday’s market bounce, on the back of a broad “risk-off” tone to US equities, did much to repair the near term technicals for USDCAD.  Comments from Bank of Canada governor about the upward path of interest rates being “uncertain” certainly helped in our opinion.  Expect the market to challenge the 1.3250s to the upside should we get weak Retail Sales numbers this morning, and conversely expect yesterday’s chart support of 1.3160-70 to be test should the numbers beat expectations.  We think a strong move above the 1.3250s will once again put the January/February downtrend at risk of ending.  Over 1.5blnUSD in options expire between 1.3180 and 1.3215 this morning at 10amET, which could keep the price action glued to current levels until then.

• EURUSD: Euro/dollar continues to chop in an expanding range, as the gap between trend-line support and resistance slowly increases.  See hourly EURUSD chart.  Today’s North American calendar will be full of Fed-speak, so get ready to watch your newswire.

  8:15am – Bostic

  10:15am – Williams & Daly

  12:00pm – Clarida

  12:30pm – Potter

  1:30pm – Quarles, Bullard & Harker

  The economic data out of Europe this morning was on the weak side yet again.  While the revision to Germany’s Q4 GDP read came in a 0% as expected, Germany’s IFO survey for February missed estimates (coming in at 103.4 vs 103.9).  USDCNH is trading steady this morning after the Australian coal-ban headlines rescued the market from the depths below 6.70.  We think EURUSD may leak lower and search for buyers here.  Over 1.6blnEUR in options expire at the 1.1300 strike this morning.

• GBPUSD: Sterling is pulling back this morning as recent fund longs appear to be liquidating ahead of a weekend with plenty of negative Brexit headline risk.  The Tory party resignations are piling up.  More here.  Brexit debate will resume next week in Parliament, before which Theresa May is expected to make another speech (Feb 26th).  We think GBPUSD could slip all the way back to chart support in the 1.2940-50s should the 1.3020s not be regained in short order. 

• AUDUSD: Aussie traders are licking their wounds this morning after yesterday’s massive bearish reversal pattern.  The Australian PM was on the wires overnight downplaying the thought that relations with China are souring.  RBA Governor Lowe also made some headlines, and while he reiterated the central bank’s new “broadly balanced” monetary policy stance for the near futures, he hinted at a rate hike for next year as “may be appropriate” (which seemed to calm the market a little bit).  AUDUSD now sits above chart support in the 0.7080s, but below resistance in the 0.7110-20s.

• USDJPY: Dollar/yen is enjoying another bid this morning as chart support in the 110.60s held firm yet again in overnight trade.  A nice bid to the S&P futures this morning is helping the cause, as stocks look set to claw back half of yesterday’s losses this morning.  Equity traders appear to be hopeful that Trump will extend the March 1st tariff deadline when he meets with Chinese Vice Premier Liu He this afternoon.  We think USDJPY still has legs to proceed higher into the 111s.

Tune in @EBCTradeDesk for more real-time market coverage.

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About the Author

Erik Bregar - Director, FX Trading

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.

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