otc fx

Dollar Drops Anew, All Eyes on Jobless Claims, Loonie Outperforms

Summary: US markets finished another choppy session after chances for a planned Senate vote to approve a USD 2 trillion relief package faded as markets closed on Wednesday. US stocks pared gains with the Dow slipping from 21,240 to 21,127 in late New York. Covid-19 continued to expand with the biggest increases taking place in the U.S. and Europe. FX traders sold the Greenback for the 2nd day running with eyes on tonight’s US Unemployment Claims, expected to blow-out to between 1-4 million from 281,000 last week. The Dollar Index (USD/DXY) fell 1.05% to 100.961 from 101.90 yesterday. Sterling jumped to 1.1973 overnight and 1-week highs before closing to settle at 1.1887, up 0.64%. The Australian Dollar jumped to 0.60734 overnight, a 15 day high before easing to 0.5958. Against the Canadian Loonie, the US Dollar slumped 1.63% to 1.4205 from 1.4490 yesterday. Canada’s government approved a stimulus package of CAD 27 billion to ease the economic impact of the coronavirus outbreak. Brent Crude Oil prices steadied to USD 29.90 (USD 29.00). The Euro advanced to 1.0877 from 1.0760 on the broad-based US Dollar weakness. The Dollar dipped against the Japanese Yen to 111.20 (111.60).

US CORE DGO - Forex Factory - 26 March 2020
US CORE DGO – Forex Factory – 26 March 2020

Global bond yields steadied. The benchmark US 10-year rate was 2 basis points higher to 0.86%. Germany’s 10-year Bund yield closed at -0.27% from -0.33%. Japan’s 10-year JGB yield was at 0.03% from 0.02% yesterday.
UK Core CPI rose to 1.7% on an annual basis, higher than forecasts of 1.5%. US March Core Durable Goods Orders (excluding transportation items) underwhelmed at -0.6% against expectations of -0.4% and February’s 0.8%.

On the Lookout: Markets will turn their focus today on the US Unemployment Claims which is expected to see an unprecedented number, many from the hospitality sector, due to the shutdown of the economy. Economists forecast a range of between 1 million to 4 million claims filed, the largest layoff of American workers over a short period of time. The previous week saw unemployment claims rise to 281,000 from 211,000. Tonight also sees US Final GDP (Q4 2019) and US Goods Trade Balance,
Today’s other event is the Bank of England monetary policy meeting and statement. The BOE is not expected to change its Official Bank rate currently at 0.1%.
Caution persists in asset markets as the US Senate agreed to vote on the US 2 trillion package on Friday.

Trading Perspective: The Dollar dropped for the second day running on expectations of a large rise in US Jobless Claims which are released tonight. Forecasts range from 1 million to 4 million workers claiming for Unemployment benefits. It could be a case of sell the rumour, buy the fact first up for the Greenback should the number be closer to the 1 million mark. A number of 3-4 million will see US Dollar selling accelerate. The Dollar Index (USD/DXY) would break below 100, and the Euro above 1.0900. In the meantime, expect consolidation within recent ranges which have been wide.

AUD/USD – Range Bound as Base Lifts With 0.57-0.62 in Sight

The Australian Dollar extended its climb against the Greenback, finishing at 0.5958 from yesterday’s close of 0.5920. The Battler jumped past the 0.60 00-20 resistance area to an overnight and 15-day high at 0.60734 before slipping below 0.60 cents to 0.5958. Today sees a slow start with all eyes on tonight’s upcoming US Jobless Claims report.

FX STREET AUD USD Chart - 26 March 2020
FX STREET AUD USD Chart – 26 March 2020

The US Senate’s agreement to vote on the much anticipated USD 2 trillion stimulus/relief package to Friday saw stocks and risk assets pare gains. This will keep a lid to any strong Aussie rallies today. “
Immediate resistance lies at the 0.6020 level followed by 0.6070. Immediate support can be found at 0.5930 (overnight low) and 0.5880.

Australia’s own struggle with Covid-19 saw New South Wales officials saying they will not allow any passengers off cruise ships unless new protocols are followed. New South Wales has the largest number of confirmed coronavirus cases with 1,029 (as at last night) from Australia’s total of 2,398.

Look for consolidation today with a likely range, first-up, of 0.5785-0.6025. Continue to favour buying dips.

EUR/USD – Correction Up Limited to 1.09, Spec Long Bets Support at 1.07

The Euro advanced 0.81% to 1.0878 from yesterday’s NY close of 1.0755. EUR/USD traded to an overnight high at 1.0889, virtually matching the previous session’s high (1.0888). The shared currency is trading on the back of the general US Dollar moves. Expect more of the same today with the focus on the US Jobless Claims report. There are some Euro area data, the most prominent being Germany’s Gfk Consumer Climate report.

EURO - DOLLAR CHART 1H - Daily FX - 26 March 2020
EURO – DOLLAR CHART 1H – Daily FX – 26 March 2020

EUR/USD has immediate and strong resistance at 1.0900. Yesterday we highlighted that the latest Commitment of Traders report saw speculators turn long of Euro bets, and for the first time net short USD since June 2018. Most of this were the big EUR turnaround of 45,162 contracts. This will also reinforce the topside of EUR/USD at 1.0900. The next resistance level lies at 1.0950 followed by 1.1000 and 1.1050

Look for the Euro to consolidate with a likely range today, first up of 1.0780-1.0920. Just trade the range shag on this one today, no strong views until the US Jobless data comes out.

USD/CAD – Loonie Soars as Oil Recovers, Government Stimulus Package

The Canadian Dollar soared against its US counterpart, the Loonie emerging as best performer in FX, up 1.63%. USD/CAD plunged from 1.4490 to 1.4178 before climbing to settle at 1.4207 in late New York. Brent Crude Oil prices recovered on news the U.S and Saudi Arabia agreed to work together to stabilise prices. Canada’s House of Commons agreed and voted to pass a CAD 27 billion aid package to ease the economic impact of the coronavirus outbreak. US lawmakers would benefit from the example of their northern counterparts.

USDCAD - Forex Live Chart - 1H - 26 March 2020
USDCAD – Forex Live Chart – 1H – 26 March 2020

USD/CAD traded to its lowest level in a week to 1.4178. Immediate support can be found at 1.4170 followed by 1.4120 and 1.4070. Immediate resistance lies at 1.4280, 1.4330 and 1.4380. While Canada is a major exporter of commodities, oil prices remain a factor. The other side of the Canadian Dollar is the US Dollar, and upcoming US data will also impact the Loonie.

Look for a likely range today, first up between 1.4150-1.4380. Just trade the range shag on this one, there is plenty of room to trade and profit from it.