USDCAD TECHS: Clean Break of 50-Day EMA

• RES 4: 1.3929 High Jan 16 and a reversal trigger     
• RES 3: 1.3879 High Jan 20
• RES 2: 1.3760 50-day EMA 
• RES 1: 1.3625/3725 High Feb 02
• PRICE: 1.3574 @ 16:53 GMT Feb 11
• SUP 1: 1.3482 Low Feb 6 / Low Jan 30 and the bear trigger  
• SUP 2: 1.3473 Low Oct 2 ‘24
• SUP 3: 1.3400 50.0% retracement of the 2021 - 2025 uptrend 
• SUP 4: 1.3359 Low Jan 31 2024     

USDCAD rallied Wednesday on the back of the stronger-than-expected US jobs data, keeping markets clear of any test on the bear trigger into 1.3482. This rally should be taken in the context of the recent move lower, which exposed key support at the Jan 30 low. A break of this level would confirm a resumption of the medium-term downtrend and pave the way for an extension towards the 1.3400 handle, a Fibonacci retracement.  Key short-term resistance has been defined at 1.3725, the Feb 2 high.  

US President Donald Trump is shortly due to join Energy Secretary Chris Wright and EPA Administrator Lee Zeldin at a White House event touting coal as a 'reliable and affordable' part of America’s energy mix. According to administration officials, Trump will also be awarded the inaugural “Undisputed Champion of Coal” by the Washington Coal Club. LIVESTREAM

• White House Press Secretary Karoline Leavitt told reporters yesterday that the remainder of the week will be focused on “energy and deregulation”. Leavitt confirmed that the White House will “formalize the rescission of the 2009 Obama era endangerment finding,” which forms the basis of federal climate regulation.
• Leavitt said, “This will be the largest deregulatory action in American history, and it will save the American people $1.3 trillion in crushing regulations. The bulk of the savings will stem from reduced costs for new vehicles, with the EPA projecting average per vehicle savings of more than $2,400 for popular light duty cars, SUVs and trucks.”
• The Wall Street Journal reports that Trump will announce, “a new executive order that directs the Defense Department to enter into agreements to buy electricity from coal-fired power plants. The administration will also award funding to five coal plants in West Virginia, Ohio, North Carolina and Kentucky to recommission and upgrade the facilities.”

The AUD/USD had a range overnight of 0.7072-0.7143, Asia is currently trading around 0.7125. The AUD strength continues to stand out as a much stronger than expected Payrolls report saw US yields move higher and the USD get a welcome reprieve. The AUD though after a brief drop is back towards its highs, the AUD remains a favourite vehicle to express a long at the moment. The AUD has been outperforming across the board as leveraged funds continue to add to their longs as further hikes are potentially priced in. On the day, the first support is back toward the 0.7060–0.7090 area, and then the 0.7000 area. The bulls will be looking for dips to remain supported in order to regain the momentum to rechallenge the pivotal 0.7100-0.7200 area.  A sustained break above here targets 0.7600-0.7800 first and then 0.8000-0.8200.

• “US and Australia’s yield spread creates attractive opportunities in the government bond markets of both countries, according to Aviva Investors’ Ed Hutchings.” - BBG
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.7080(AUD342m). Upcoming Close Strikes : 0.6800(AUD1.55b Feb 13), 0.6825(AUD791m Feb 13) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 79 Points
• Data/Event: RBA’s Sarah Hunter speaks at CEDA event in Perth, Consumer Inflation Expectation

Fig 1: AUD/USD spot Weekly Chart

Source: MNI - Market News/Bloomberg Finance L.P