EURUSD trades lower as the negative European headlines continue to mount
Erik Bregar of Exchange Bank of Canada - InsideFutures.com - Fri Feb 15, 8:37AM CST
Summary
  • USDCAD:Dollar/CAD is hovering around chart support in the 1.3280s this morning after yesterdays breakout attempt above the 1.3310-20s failed. We blame it on a yet another snap back in March crude oil prices after the commodity bounced off support in the 53.20s. The S&P futures are clawing back overnight losses this morning as traders digest the headlines surrounding the conclusion of US/China trade talks today. While both sides didnt really say much in their official communiques, the tone remained positive and Chinas Xi Jinping said talks with the US would continue next week in Washington. Crude oil prices are staying bid amidst this positive risk-on tone to markets, plus there appears to be some added support from headlines surrounding the partial shut-down of Saudi Arabia's largest off-shore oil field. Morehere. Therefore, USDCAD remains under a bit of pressure this morning. Todays North American calendar features the US Industrial Production figures for January at 9:15amET, following by the Michigan Consumer Sentiment survey, a speech from the Feds Bostic, and a speech from President Trump (all at 10amET). We think the 1.3280s will be todays pivot ahead of the long weekend. Canadian markets will be closed on Monday for the Family Day holiday while US markets will be observing Presidents Day.

  • EURUSD:Euro/dollar is bucking the broadly lower USD trend this morning, as a combination of Spains snap election announcement (April 28th), and negative EU comments from Italys Borghi send Spanish and Italian bond prices lower. Seehereandherefor more details. This has caused the BTP/Bund spread to rebound strongly back towards +280bp today, and any uptick in this widely followed interest rate spread has traditionally been EURUSD negative. We also posit that todays 23.3bln Fed SOMA redemption (the 2nd largest to date) is exacerbating the move lower as the US Fed is taking a sizable amount of USD liquidity out of the market. Morehereon SOMA. Familiar trend-line support in EURUSD is being put to the test yet again now as NY trading gets underway. We think this support (now the 1.1260s) will be the pivot for price action to close the week. Stay above and we might get some short covering, but move below and we could possibly tumble much lower. BREAKING: ECBs Coeure: Slowdown Clearly Stronger And Broader Than Expected, ECBs Coeure: New TLTRO Possible, Currently Discussing It. EURUSD has now broken support and is struggling to regain it.

  • GBPUSD:Sterling is meandering between support in the 1.2770s and resistance in the 1.2850s this morning as traders digest some positive and negative news. UK Retail Sales for January was the positive headline this morning, coming in at +1.0% MoM vs +0.2% expected. However, negative Brexit headlines continue to weigh following another humiliating defeat (although non-binding) for Theresa May in the House of Commons yesterday. Morehere. This is now leading to more anxiety as this doesnt help the UKs negotiating position with the EU. Eight UK ministers are now threatening to quit if Theresa May doesnt officially take the no-deal Brexit option off the table. UK Brexit minister Barclay is expectedto continue talks with the EUs Barnier in Brussels next week, but one has to wonder at what point will something actually get done. The clock continues to tick down (42 days to go until Brexit) and GBPUSD continues to tick down with it.

  • AUDUSD:Theres not a whole lot going on in the Aussie today as North American traders prepare for a long weekend. Sellers came in during Asia as USDCNH and the broader USD ticked higher, but buyers returned when USDCNH turned lower with the uptick in the S&P futures. Traders continue to wrestle with yesterdays familiar trend-line pivot level, which now comes in just above 0.7100.

  • USDJPY:Dollar/yen is trying to claw back overnight losses this morning, after yesterdays negative NY close on the charts. The slip below trend-line support in the 110.50s invitedmore selling down to the next support level in the 110.30s during Asia. Buyers swooped in here though after the S&Ps and the Chinese yuan reacted positively to the latest US/China trade headlines out of Beijing. A move back above the 110.50s would do much to invite positive momentum back into the market.

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MARKET ANALYSIS CHARTS

USD/CAD DAILY CHART

USD/CAD HOURLY CHART

MARCH 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

MARCH COPPER DAILY CHART

USD/JPY DAILY CHART

USD/JPY HOURLY CHART

MARCH S&P DAILY CHART

Charts: TWS Workspace


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Erik Bregar - Director, FX Trading
Exchange Bank of Canada
Toronto, Ontario
Email:erik.bregar@ebcfx.com
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