FOREX: DXY Consolidates Weekly Decline, CAD Soars Post Employment Report
Dec-05 18:36
- Two-way swings left the USD index close to unchanged on Friday, but importantly the index is consolidating a solid 0.5% decline this week, as a short-term bearish bias dominates the narrative. Fed easing expectations and associated risk-on dynamics continue to weigh on the greenback.
- There has been an impressive 0.9% selloff for USDCAD on Friday following the impressive employment report for November, where the unemployment rate dipped to the 6.5%, the lowest level since July 2024.
- Tepid trade talk optimism and technical breaks have exacerbated the USDCAD declines. Both the breach of the bull channel around 1.3940, and the clean break of key 1.3888 support significantly bolster the renewed bearish theme, placing 1.3812 and 1.3727 as the next chart points of note. As a reminder, we have both the BOC and FOMC rate decisions next week, likely to keep the spotlight on USDCAD in coming sessions.
- Elsewhere, AUDUSD traded further above the late October highs of 0.6618 to reach a session peak of 0.6649, the highest level since mid-September. The pair has now posted 10 consecutive sessions of higher highs, as the bullish impulsive wave extends. With a number of resistance points being cleared, targets on the topside are now found at 0.6660 (Sep 18 high) and 0.6723, the Oct 21 2024 high.
- In emerging markets, the Brazilian real came under significant pressure on Friday as reports were confirmed that Ex-President Jair Bolsonaro will throw his support behind his son Flavio for next year’s presidential candidate. USDBRL rose over 2% on the sharp increase in potential political uncertainty ahead.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
PIPELINE: Corporate Bond Update: Over $9.5B Debt to Issue Wednesday
Nov-05 18:35
- $9.65B to price Wednesday, $56.05B/wk
- Date $MM Issuer (Priced *, Launch #)
- 11/05 $1.7B #Transcontinental Gas Pipeline $1B 10Y +95, $700M 30Y +105
- 11/05 $1.25B #Intercontinental Exchange $600M 3Y +45, $650M +5Y +60
- 11/05 $1.25B #Equinix 5Y +85
- 11/05 $1B #Santos Finance 10Y +168
- 11/05 $850M #AviLease Capital 5Y +110
- 11/05 $750M #Apollo Global Mgt $400M 5Y +85, $350M 8/35 Tap +110
- 11/05 $750M #CBRE Services 7Y +98
- 11/05 $600M #Mattel 5Y +130
- 11/05 $500M #Polaris +5Y +185
- 11/05 $1B *KEPCO $600M 3Y SOFR+62, $400M 5Y +47
GBPUSD TECHS: Bear Leg Extension
Nov-05 18:30
- RES 4: 1.3471 High Oct 17 and a key short-term resistance
- RES 3: 1.3369 50-day EMA
- RES 2: 1.3249/3277 Low Oct 14 / 20-day EMA
- RES 1: 1.3142 Low Aug 1
- PRICE: 1.3041 @ 15:57 GMT Nov 5
- SUP 1: 1.3010 Low Nov 4
- SUP 2: 1.2971 1.382 proj of the Sep 17 - 25 - Oct 1 price swing
- SUP 3: 1.2945 50.0% retracement of the Jan 13 - Jul 1 bull leg
- SUP 4: 1.2877 1.618 proj of the Sep 17 - 25 - Oct 1 price swing
A sharp sell-off in GBPUSD Tuesday reinforces bearish conditions. A key support at 1.3142, the Aug 1 low, has recently been cleared. The break confirmed a resumption of the downtrend that started Sep 17. Sights are on 1.2971 next, a Fibonacci projection point. Note that the trend is in oversold territory, a recovery would allow this condition to unwind. Initial resistance is at 1.3142, the Aug 1 low.
US: FED Reverse Repo Operation
Nov-05 18:20
RRP usage slips to $12.700B with 12 counterparties this afternoon - from $16.893B Tuesday. Compares to $2.435B on October 24 (lowest level since mid-March 2021) and the year's highest usage of $460.731B on June 30.
