The USD exchange rate reached a recent high against most currencies, as investors and traders became more optimistic that Washington will be able to enact its tax reform program. Global equities moved higher as well, while markets are now looking to tomorrow’s U.S. job growth numbers. Expectations of north of 200,000 new jobs, will be the final piece of the puzzle that the Federal Reserve will hike interest rates next Wednesday.
The Canadian Dollar fell in tandem with other major currencies, however, the talk of the day is Bitcoin and how it has touched $16,000 USD for the first time. It has surged on expectations that new bitcoin derivatives products expected to begin trading this month will boost mainstream demand. Some of the world’s biggest brokerages criticized those plans on Wednesday, telling regulators the contracts have been rushed to market without enough due diligence.
Support Resistance
USDCAD 1.2815, 1.2795, 1.2788 1.2848, 1.2883, 1.2898
XE Reports:
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EUR-USD exchange rate tipped to a low of 1.1776, breaching yesterday’s low by 3 pips and making this the fifth consecutive session the pair has carved out a fresh low, a correction from last Friday’s peak at 1.1940. Supply ahead of the 1.2000 level put a cap on the pairing. USD-JPY exchange rate lifted to a two-day high of 112.73, extending the rebound from yesterday’s four-session low at 111.99. A steadying in global stock markets has facilitated a trimming of the recently built up safe have premium in the yen, while the dollar itself has picked up a broader bid. AUD-USD tumbled 0.5% in making a five-month low just under 0.7540 — price action the reaffirms the bear trend that’s been in evolution since early September. The move was sparked by data showing a sharp narrowing in Australia’s trade surplus in October. USD-CAD has lifted for three consecutive days now, achieving a high of 1.2834 today, reversing most of the sharp losses that were seen last Friday following above-forecast GDP and employment data out of Canada. The BoC’s cautious guidance following its policy meeting yesterday, when it left its policy rate at 1.0%, as had been widely anticipated, has been weighing on the Canadian buck.
[EUR, USD]
EUR-USD has continued to ply a relatively narrow range in the lower 1.18s. The pair is trading near the midway point of the range that’s been seen over the last three months, and we e anticipate that the broadly sideways chop will continue for now in the absence of direction-shifting data or news from either side of the pond. Resistance is at 1.1905-10, and key support is at 1.1800.
[USD, JPY]
USD-JPY exchange rate lifted to a two-day high of 112.73, extending the rebound from yesterday’s four-session low at 111.99. A steadying in global stock markets has facilitated a trimming of the recently built up safe have premium in the yen, while the dollar itself has picked up a broader bid. Technically, the picture is somewhat convoluted. The pairing has been in broadly sideways chop around, roughly, 108.0 to 115.00, for eight months now, and more of the same looks likely. Resistance comes in at 112.86-87 and 113.40, and support comes in at 111.99-112.00 and 111.65-66.
[GBP, USD]
The pound settled after underperforming in recent sessions. Markets are on tenterhooks regarding Brexit-related developments as the UK government pushes for a deal with the EU on divorcing terms. The Irish border remains a key sticking point, and there has been a political backlash against the proposed “regulatory alignment” deal, with the government refusing to disclose the full details. Cable hit a one-week low of 1.3358 yesterday. As EU officials have been stressing, a deal on divorce terms has to be struck by the end of the week, ahead of the upcoming EU leaders’ summit, if there is any chance that talks can move to a post-Brexit trade deal. The risks for sterling remains to the downside. Cable has resistance at 1.3395.
[USD, CHF]
EUR-CHF has seen volatile price action over the last several sessions, having on Friday turned sharply lower, to a low of 1.1599 after clocking a 35-month high of 1.1737, and subsequently lifting briefly back above 1.1700. There have been multiple failures to sustain gains above 1.1700 over the last month, and market participants will be wary of supply above this level. We remain bullish over the medium term, however. Assuming the Eurozone has conquered, or can conquer, existential political threats, and assuming the SNB remains anchored to ultra-accommodative monetary policy, which looks likely to be the case for the foreseeable, we anticipate EUR-CHF will make an eventual return to 1.2000. Support is at 1.1650.
[USD, CAD]
USD-CAD exchange rate has lifted for three consecutive days now, achieving a high of 1.2834 today, reversing most of the sharp losses that were seen last Friday following above-forecast GDP and employment data out of Canada. The BoC’s cautious guidance following its policy meeting yesterday, when it left its policy rate at 1.0%, as had been widely anticipated, has been weighing on the Canadian buck. In particular, the BoC noted that slack remains in the labour market, despite recent rises in overall employment. We advise following USD-CAD’s nascent trend higher for now. Support is at 1.2785.
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