Broad "risk-off" flows kick in after Trump's speech.

ANALYSIS

USDCAD

The markets are displaying broad risk-off type flows this morning; with the S&P futures, Chinese yuan, oil and copper all trading lower while bonds, Eurodollar futures, the yen and the broader USD trades higher. We think this is follow-through disappointment from President Trumps address to the Economic Club of New York yesterday; a speech where we feel he didnt deliver the constructive statement on China that traders were expecting. USDCAD has broken above the 1.3250 resistance level on an intra-day basis, which we think is technically significant because (should it close NY trade above here) it would end the markets volatile downtrend weve witnessed since September and set the course for the 1.33 handle once again.

The US just reported its CPI data for October and the numbers came in mixed (+1.8% YoY vs +1.7% on the headline but +2.3% YoY vs +2.4% on the core measure). Todays main event will be Jerome Powells annual testimony to the congressional Joint Economic Committee at 11amET. Market chatter suggests the Fed chairman wont deviate from his most recent press conference at the end of October, but traders will be glued to this event anyways because of how sensitive trading algorithms are nowadays to the way wire headlines are written. Well also hear from Fed members Barkin, Kashkari and Harker in the NY afternoon.

USDCAD DAILY

USDCAD DAILY

USDCAD HOURLY

USDCAD HOURLY

DEC CRUDE OIL DAILY

DEC CRUDE OIL DAILY

EURUSD

The funk that has plagued EURUSD for the last two week continues this morning, despite the fall-off in US yields weve witnessed since Trumps speech yesterday and despite December golds risk-off rally so far today. So what gives? We noted yesterday to clients that President Trump spoke quite negatively about Europe in his speech, saying Europe has set up terrible barriers for the US on trade, in some ways worse than China. Perhaps this is causing some anxiety ahead of the delay of European auto tariffs for another six months, which Trump is expected to grant this week? Perhaps this is also angst ahead of tomorrows flash Q3 GDP print out of Germany, where traders are expecting a -0.1% negative print (aka recession)? All this being said, EURUSD continues to hold the psychological 1.1000 support level as NY trade gets underway today. We think the market could rebound a bit if Jerome Powell eases up on his optimistic tone of late.

EURUSD DAILY

EURUSD DAILY

EURUSD HOURLY

EURUSD HOURLY

DEC GOLD DAILY

DEC GOLD DAILY

GBPUSD

Bank of England rate cut market chatter has ticked up a notch this morning after the UK reported softer than expected headline CPI figures for the month of October (+1.5% YoY vs +1.6%). Sterling traders dont seem all that concerned for the moment however as the core (ex food/energy) measure matched expectations of +1.7% YoY. GBPUSD remains stuck within a range (1.2820s to 1.2870s). Ditto for the EURGBP cross (0.8560-0.8600). The BBCs latest General Election Poll Tracker show the Tories 10pts ahead of the Labour party. Seeherefor more detail.

GBPUSD DAILY

GBPUSD DAILY

GBPUSD HOURLY

GBPUSD HOURLY

EURGBP DAILY

EURGBP DAILY


AUDUSD

The Aussie spiked 20pts higher after the Reserve Bank of New Zealand (RBNZ) unexpectedly kept interest rates on hold last night, but this move in AUDUSD fizzed out pretty fast as focus returned to a negative sounding US/China trade article released from the WSJ (seehere), some dovish RBA calls from National Australia Bank and BIS Oxford Economics, and a ho-hum Q3 Wage Price Index report out of Australia (+2.2% YoY vs +2.3% expected). We found it interesting that RBNZ Governor Orr noted there was no need to play catch-up to Australia on rate cuts, which sort of implied that the Kiwis are ahead of the curve on monetary policy vis a vis the Aussies (the AUDNZD cross plunged lower).This mornings broad risk-off move in European trade then saw AUDUSD slip below the 0.6830s support level, which doesnt bode well for the markets technical picture in our opinion. Australia will report its October Employment Report at 7:30pmET tonight, and the expectations here are for +15k jobs (vs 14.7k last month) and for the unemployment rate to tick slightly higher to 5.3%.

AUDUSD DAILY

AUDUSD DAILY

AUDUSD HOURLY

AUDUSD HOURLY

USDCNH DAILY

USDCNH DAILY


USDJPY

Dollar/yen is falling with US yields this morning as the rest of the world catches up with how disappointing Trumps speech was yesterday in our opinion. We dont think this mornings mixed US CPI release helps the cause for US yields and we view the 108.60s as the next major support level for USDJPY. Next up is Jerome Powell at 11amET. Japan will report its Q3 GDP figures at 6:50pmET tonight (+0.2% expected QoQ).

USDJPY DAILY

USDJPY DAILY

USDJPY HOURLY

USDJPY HOURLY

US 10YR BOND YIELD DAILY

US 10YR BOND YIELD DAILY

Charts: Reuters Eikon


About the Author

Erik Bregar

Erik Bregar - Director, Head of FX Strategy

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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 firms 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 Canadas largest independent broker-dealers.

Interested in creating a custom foreign exchange trading plan?Contact usor call CXI's trading desk directly at1-833-572-8933.

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