CAD lags heavily ahead of BoC tonight, AUD manages to recover off the lows
Pound manages to recover off fresh 1.19 lows ahead of early election debate, BoC tonight expected to keep rates at 1.75%
EUR/USD: Recovering off the lows as US ISM contraction surprise takes the greenback lower
The US dollar index reached a two-year high yesterday, only to retrace and finish lower for the session following a surprise ISM manufacturing PMI figure that showed its first contraction in nearly three years. That helped take this pair’s price off fresh lows suffered earlier in the session, but has failed to undo its current bear trend technical overview whereby nearly all its main technical indicators are bearish. As for today, more market-moving items are on the calendar including service PMI figures out of the Eurozone expected to show ongoing expansion, and Fed speak out of the US ahead of this Friday’s NFP, which will carry more significance in the face of weakness in US manufacturing.
GBP/USD: Recovering off of an early plummet into the 1.19s as no-deal Brexit likelihoods drop
It was a scary plummet earlier in the session yesterday but managed to recover by the end of the session thanks to a drop in the likelihood of a no-deal Brexit scenario with the Brexit vote loss suffered by the UK PM who announced he’ll attempt to push for a snap election, and with a vote likely today to decide whether to approve it. Weakness in the greenback that occurred later yesterday also helped, but thus far the pair’s bearish technical outlook remains intact, even if its fundamental forces that are infusing volatility in the pair’s price, and with a lack of liquidity forcing speculative moves upon it. While the economic calendar shows that the UK’s services PMI figure will be released today following yesterday’s worse than expected construction data, market focus will remain on the UK’s parliament.
USD/JPY: Relatively range-bound move with the greenback suffering as yields decline
Risk-off scenarios generally aid both safe haven aspects of this pair, but with US recessionary risks rising not just from an inverted yield curve but worsening manufacturing data and it was the greenback that bore the brunt of the decline. US yields are now declining further, but overall the difference between both JPY and USD remains relatively limiting, with more needed to shift its technical overview that is showing negative technical bias but reliant on more risk-off/on scenarios to force its price past its main pivot points. As it stands, long-term negative forces remain with its weekly outlook continuing to show negative technical bias.
USD/CAD: Positive technical bias fails to subside ahead of fundamental Bank of Canada event
Positive technical bias in this pair has failed to subside, especially with a stronger greenback in the FX market keeping most FX majors at bay. An initializing bull trend may be more befitting for its technical overview especially with a trending ADX, but consolidatory moves upward has made buy breakout strategies more testing on retracement. With that said, technicals mean a whole lot less today as the BoC is set to announce its monetary policy with expectations for its 1.75% rate to remain on hold. Going into the major event retail traders are heavy short at 63%, while institutional bias is majority short but at a more modest 56% having initiated more CAD shorts as per the most recent CFTC CoT report.
AUD/USD: Australian dollar outperforms while US dollar lags significantly, short-term support holds
Following the RBA's decision to keep rates on hold at 1%, the commodity currency managed to not just retrace back up for the session against the dollar but outperform against a wounded greenback hurt by an ISM contraction. And more fundamental data has been released this morning, this time in the form of Australian GDP that was expected to show 0.5% growth that the results managed to match. As for service PMI figures for Australia and Caixin's estimate, both were better than expected and expanding, with the Australian dollar moving higher as of this morning. Retail bias has dropped 8% on long profit-taking with the pair’s short-term support level holding and its bear trend technical overview stalling heavily at current levels.
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