Home Markets News Weather

Month-end USD sales appear to have run their course

« Go Back

ANALYSIS

USDCAD

Dollar/CAD traders are trying to buy the dips this morning as month-end dollar selling seems to have run its course. The timing of thesere-balancingflows is notoriously difficult to predict but wed wager that a lot of portfolio managers jumped the gun yesterday given the broader USDs inability to meaningfully bounce after the Fed meeting. Theres been a lot of chatter about CADs under-performance yesterday amidst these flows and we think this was largely because of September WTIs 5% implosion; a sell-off that has now ruined the oil markets upside breakout pattern from July 21. We think some pre-hedging ahead of todays massive 1.3400 option expiry (now valued at $2.2blnUSD) also attracted CAD sales.

Canada just reported a slightly better than expected May GDP figure (+4.5% vs +3.5%), but the markets lack of reaction tells you everything you need to know...old newsmove on. Todays 10amET NY optioncut also features a $2.3blnUSD expiry at 1.3500, although the magnetizing effect of this strike shouldnt come into play unless USDCAD breaks above 1.3450 in the next hour. Watch for some potentialvolatility going into the 11amET London fix, in case these month-end flows arent over just yet.


USDCAD DAILY

USDCADD_7.24

USDCAD HOURLY

USDCADH_7.24

SEP CRUDE OIL DAILY

SEPTCRUDEOILD_7.24


EURUSD

Euro/dollar ripped higher yesterday and, while Trumps election-delay thoughts helped spark the move, we felt the rally was largely driven by month-end USD sales and perhaps a sprinkle of risk-on from well-timed buying of large-cap US tech names going into last nights better than expected Nasdaq earnings parade. Themarkets subsequent reversal lower from its overnight highs above 1.19 proves the point. These flows are fickle and they eventually pass.

We dont seriously believe traders are worried about the US elections getting postponed and we think the growing talk of the USDs reserve currency status being at risk is all hogwash. The global eurodollar system, no matter how broken it is, aint going anywhere anytime soon.


EURUSD DAILY

EURUSDD_7.24

EURUSD HOURLY

EURUSDH_7.24

SPOT SILVER DAILY

SPOTGOLDD_7.24


GBPUSD

Sterling continues to rip the face of whatever Brexit-inspired GBPUSD shorts still remain in this market. It closed NY trade very strongly yesterday on broad USD weakness; shattering chart resistance at the 1.2970s and 1.3040s in the processand the market now looks poised to shoot for the 1.3200-1.3210 level. Do not stand in front of this freight train for now as the market is not trading off UK fundamentals.


GBPUSD DAILY

GBPUSDD_7.24

GBPUSD HOURLY

GBPUSDH_7.24

EURGBP DAILY

EURGBPD_7.24

AUDUSD

The Aussie recovered to close NY trade above the 0.7170s yesterday and we think month-end USD sales and some US tech stock buying were also the drivers. These flows seemed to have passed however, which could now force another test of the pivotal 0.7170 level going into the London fix at 11amET.


AUDUSD DAILY

AUDUSDD_7.24

AUDUSD HOURLY

AUDUSDH_7.24

USDCNH DAILY

USDCNHD_7.24


USDJPY

Dollar/yen traders made up their mind yesterday afternoon and continued to follow the broader USD lower when EURUSD cracked above the 1.1800 mark. We think the ongoing downtrend for US yields continues to add weight to this market, but USDJPYs correlation with broader USD flows has been even tighter of lateand so were watching this dynamic even more closely.

Japanese Finance Minister Taro Aso said the same thing that one of his officials said the day before, with regards to recent yen strength. Stability is important, so Im closely monitoring it with a sense of urgency.This wasnot the reason behind USDJPYs bounce off the 104.20s and back above the 104.70s support level overnight, but it sure feels like Japanese officials dont like the market trading below the 105 handle.


USDJPY DAILY

USDJPYD_7.24

USDJPY HOURLY

USDJPYH_7.24

GERMAN 10-YR BUND YIELD DAILY

US10YRBONDYIELDD_7.24

Charts: Reuters Eikon

Interested in creating a custom foreign exchange trading plan?Contact usor call EBC's trading desk directly at1-888-729-9716.

About Exchange Bank of Canada
Exchange Bank of Canada, EBC Canadas Foreign Exchange Bank, is the only Schedule 1 Canadian bank specializing in foreign currency exchange and international payments for financial institutions and corporations. EBC provides innovative foreign exchange management and integrated international payment solutions tailored to meet business needs on a global scale. Leveraging industry leading technology and a client-focused team of experts EBC delivers comprehensive, cost-effective and trusted payment processes and foreign exchange currency solutions to create financial and operational efficiencies. To learn more, visit:www.ebcfx.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 Exchange Bank of Canada 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 Exchange Bank of Canada, its affiliates or any of their employees incur any responsibility. Neither Exchange Bank of Canada 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 Exchange Bank of Canada 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 Exchange Bank of Canada.
« Go Back

Real-time Login
     Get Real-time Data
Edit Preferences      Refresh:   On   Off