FOREX: Equity Selloff Has Limited FX Impact, CAD Boosted on Jobs Data
Nov-07 18:20
- Further volatility and bearish sentiment for the major equity benchmarks on Friday had a relatively limited impact in the currency space. Underperformance of the US indices and another 1.6% move in the Nasdaq weighed on the dollar index, with the likes of EUR and GBP outperforming on the session.
- In general, the broader dollar rally that had been playing out following the FOMC showed signs of fatigue this week. The DXY reaching its initial objective at the August highs (~100.25) may have also contributed to the reversal lower across Thursday and Friday trade. Amid this dynamic, EURUSD is now roughly 100 pips above the recent pullback lows, trading around 1.1580 as we approach the weekend close.
- Additionally, and following the dovish hold by the Bank of England on Thursday, sterling has traded in a resilient manner with cable rising back above the prior breakdown level of 1.3140 to trade around 1.3175 at typing. Positioning dynamics has likely been assisting the bounce, while the move higher is allowing an oversold trend condition to unwind.
- CAD has been one of the best performers across the G10, following a stellar employment report released today. USDCAD sits 0.45% lower on the session, notably falling back below the prior breakout level at 1.4080. Furthermore, the latest price action sees USDCAD edge further away from previously touted resistance, the top of a bull channel, drawn from the July 23 low. Having highlighted this area as a key obstacle to further USDCAD strength, price has subsequently respected the line twice, bolstering the potential of a short-term bearish signal.
- China PPI/CPI data crosses over the weekend, before the focus turns to UK labour market data on Tuesday.
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US TSY FUTURES: BLOCK: Dec'25 2Y Sale Post-Minutes
Oct-08 18:12
- -6,364 TUZ5 104-06.5, sell through 104-06.62 post time bid at 1403:46ET, DV01 $250,000.
- The 2Y contract trades 104-06.5 last (-1.62) vs. 104-06.38 low.
US TSYS: Post-Sep FOMC Minutes React
Oct-08 18:03
- Treasury futures extended lows slightly following the release of the September FOMC meeting minutes even after showing "most officials want to ease further this year".
- Tsy Dec'25 10Y contract slips to 112-18 low (-3.5), yld 4.1249% +.0019; Curves twist flatter: 2s10s -2.102 at 53.628, 5s30s -2.458 at 99.573.
- Initial technical support at 112-12.5/01 (50-day EMA / 50.0% of Jul 15 - Sep 11 up-leg)
- Projected rate cut pricing has cooled vs. early morning levels (*): Oct'25 at -23.1bp (-23.7bp), Dec'25 at -44.2bp (-45.1bp), Jan'26 at -54.1bp (-55.2bp), Mar'26 at -64.5bp (-66.5bp).
EURGBP TECHS: Support At The 50-day EMA Remains Exposed
Oct-08 18:00
- RES 4: 0.8835 High May 3 2023
- RES 3: 0.8800 Round number resistance
- RES 2: 0.8769 High Jul 28 and the bull trigger
- RES 1: 0.8751 High Sep 25
- PRICE: 0.8663 @ 16:20 BST Oct 8
- SUP 1: 0.8673/8597 50-day EMA / Low Aug 14 and the bear trigger
- SUP 2: 0.8633 Low Sep 15
- SUP 3: 0.8562 50.0% retracement May 29 - Jul 28 upleg
- SUP 4: 0.8540 Low Jun 30
The latest pullback in EURGBP appears corrective and the trend condition is bullish. Attention is on initial firm support at 0.8673, the 50-day EMA. A clear break of this level would signal scope for a deeper retracement - this raises importance on today’s close. Note that the key trend support lies at 0.8597, the Aug 14 low. A breach of this level would highlight a stronger reversal. For bulls, key resistance and the bull trigger is 0.8769, the Jul 28 high.
