1-888-998-3948


Monday, March 4, 2019

USDCAD downtrend broken after Canada reports weaker than expected Q4 GDP

USDCAD downtrend broken after Canada reports weaker than expected Q4 GDP
Source: Powered by Exchange Bank of Canada - www.ebcfx.com/news

Summary

  • USDCAD: Dollar/CAD is drifting higher to start the week after Friday’s massive rally saw the market close above trend-line resistance in the 1.3260-70s.  The surprisingly weak Q4 Canadian GDP numbers reported on Friday, and the explosive buying that ensued, has now effectively broken the downward trend in USDCAD in our opinion.  We think the market has a good chance of taking another leg higher this week should the Bank of Canada sound cautious when updating markets on its latest interest rate decision on Wednesday.  Today’s calendar doesn’t feature any notable economic releases, so expect USDCAD to trade off the broader USD tone and crude prices.  Oil traders are trying to regain the 56.20 level on the April WTI contract this morning after Friday’s disappointing February US ISM figure spooked markets and created a bearish outside day pattern on the daily chart.  We think USDCAD could come off a bit here should oil trade higher, but we think buyers will be found at chart support (formally chart resistance) in the 1.3260-70s.

  • EURUSD: Euro/dollar is trading lower this morning as the mass exodus out of gold continues.  The precious metal selling started on Friday right after the weaker than expected US ISM figures were announced, and dragged EURUSD swiftly back down below key trend-line support in the 1.1380s.  While this gold move feels sell stop driven to us, it symbolizes broad demand for the USD and so we’re not surprised to see EURUSD hunting for buyers at the next trend-line support level in the 1.1320-30s.  This week’s key feature for EUR traders is the ECB meeting on Thursday, where traders are expecting Mario Draghi to lower European growth forecasts.  We’ll also get the February Markit Services PMI data out of Italy and Germany tomorrow, along with Italy’s Q4 GDP figures.  The BTP/Bund spread to trading 5-6bp higher this morning and USDCNH is trying to reclaim the 6.70 handle after gapping lower on the Sunday open; both of which are moderate EURUSD negatives at this hour.

  • GBPUSD: Sterling is trading with a mixed tone as we enter the NY session this morning.  Friday’s gold-inspired selling saw traders attack chart support in the low 1.32s, but this level was regained just barely into the close.  The market gapped open yesterday evening, filled it during European trade today, and is now trying to once again regain the 1.3210s.  The UK’s Market Construction PMI for February missed expectations this morning, coming in at 49.5 vs 50.3.  Tomorrow brings the Markit Services PMI for February and a speech from Bank of England governor Carney around 10:35amET.  The market appears thirsty for more Brexit headlines here as the UK and EU continue to set more meetings.  

  • AUDUSD: The Aussie is inching higher into NY trade this morning, but traders are struggling with a mess of chart resistance in the 0.7090-0.7110 zone.  Australia reported some mixed economic data overnight, which is not helping with the directionless tone.  Building Permit data for January beat expectations (2.5% vs 0%), but Q4 Inventories missed estimates (-0.2% QoQ vs +0.3%) and will likely factor into analysts lowering Australia’s Q4 GDP estimate for Tuesday night.  The Reserve Bank of Australia announces its latest decision on interest rates tonight at 10:30pmET.  While no changes are anticipated from market participants, expect traders to scrutinize any updates to the monetary policy outlook (which recently turned a bit more negative).

  • USDJPY: Dollar/yen continues to hover just shy of trend-line resistance at the 112.00 level this morning as global equities digest an article from the WSJ over the weekend that suggests that the US and China “are in the final stages of completed a trade deal”.   The S&Ps are trading +10pts at this hour, but US yields are pulling back a bit after last week’s breakout to the upside.  While the chart technicals for USDJPY continue to look good here, we think the market might pause here and look for buyers.  Support today lies in the 111.60s.

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

 

Market Analysis Charts

USD/CAD Daily Chart

USD/CAD Hourly Chart

April Crude Oil Daily Chart

EUR/USD Daily Chart

EUR/USD Hourly Chart

USD/CNH Daily Chart

GBP/USD Daily Chart

GBP/USD Hourly Chart

EUR/GBP Daily Chart

AUD/USD Daily Chart

AUD/USD Hourly Chart

May Copper Daily Chart

USD/JPY Daily Chart

USD/JPY Hourly Chart

March S&P 500 Daily

Charts: TWS Workspace


About the Author

Erik Bregar

Erik Bregar - Director, FX Trading

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 a leading provider of foreign currency exchange services in North America for financial institutions, corporations and travelers. Products and services for international travelers include access to buy and sell more than 90 foreign currencies, multi-currency cash passports, traveler's cheques and gold bullion coins and bars. For financial institutions and corporations, our services include the exchange of foreign currencies, international wire transfers, global EFT, the purchase and sale of foreign bank drafts, international traveler's cheques, and foreign cheque clearing through the use of CXI's innovative CEIFX web-based FX software 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 Isabella Guevara 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.