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Positive talk on Iran clubs oil prices yesterday, lifts CAD crosses

Erik Bregar of Exchange Bank of Canada - InsideFutures.com - Wed Jul 17, 8:56AM CDT

ANALYSIS

USDCAD

Dollar/CAD rebounded strongly off trend-line chart support in the 1.3020s yesterday and while the move got started following Trumps long way to go with China comment, it really picked up steam when Secretary of State Pompeo said the Iranians are ready to negotiate on their missile program. This took the floor out from underneath crude oil prices and sent the August contract swiftly 4% lower below $58/barrel. USDCAD charged higher above chart resistance at 1.3070 and EURCAD (which fell to new 2yr lows earlier in the session) managed to scream back above the 1.4640 support level. An Iranian spokesperson came out later in the NY afternoon denying that its missiles are up for negotiation and with that we saw oil prices and CAD recover somewhat. The Canadian CPI report for June has just been released and the numbers slightly missed expectations (in-line reads of +2.0% YoY on the headline and +1.8% YoY on the core measure) but 0% vs +0.1% exp on the MoM core read. Canada also reported its Manufacturing Sales report for the month of May and those numbers more sizably missed expectations (+1.6% MoM vs +2.0%). USDCAD has edged back above the 1.3070 level in response, but theres not much momentum behind this move right now (perhaps because of the weak US housing data just reported as wellmore below). Next up is the weekly EIA oil inventory report at 10:30amET, where traders are expecting a draw of 2.694M barrels after last nights bearish API report (-1.4M barrels vs -3M exp). Much damage was done to the August crude oil chart yesterday and so that markets rebound this morning (+1%) is now struggling at trend-line resistance in the 58.30s (which is mildly supportive USDCAD).

USDCAD DAILY

USDCAD HOURLY

AUG CRUDE OIL DAILY

EURUSD

Euro/dollar is struggling to make any headway this morning as sellers have pounced on three attempts to regain the 1.1210s support level which was lost in yesterdays trade. The German bund yield is leaking lower again after opening 3bp higher, the Eurozone CPI figures for June came in slightly better than expected (+0.2% MoM vs +0.1%) and the EURJPY cross has regained crucial chart support in the 121.20s (when should stem further risk-off flows for the time being in our opinion). The US just reported its Housing Start and Building Permit figures for the month of June and both data points missed expectations (-0.9% MoM and -6.1% MoM respectively). The Fed will releasing its latest Beige Book report at 2pmET.

EURUSD DAILY

EURUSD HOURLY

AUG GOLD DAILY

GBPUSD

The British pound had a rough open in Europe this morning as traders appeared to gun for GBP sell stops below 1.2390 in GBPUSD and above 0.9045 in EURGBP. We have since reversed course in both pairs as more negative Brexit developments have been sparse so far today, and with that we think GBP selling might take a breather here. The UK reported its June CPI data in line with expectations earlier this morning (+2.0% YoY) and so it wasnt a market mover.

GBPUSD DAILY

GBPUSD HOURLY

EURGBP DAILY

AUDUSD

The Aussie is slipping all the way back to chart support at the 0.7000 level this morning and it appears slumping base metal prices seem to leading the charge today (Chinese Dalian iron ore and copper prices both trading lower). We also think this could be trader position squaring ahead of Australias June Employment Report, which will be released at 9:30pmET tonight. The consensus expectation is for a gain of 10k jobs last month and an unemployment rate of 5.2%.

AUDUSD DAILY

AUDUSD HOURLY

SEP COPPER DAILY

USDJPY

Dollar/yen reached the 108.30s fairly easily yesterday after the market regained the 108.10s in the early goings, but it has been struggling there ever since. A slip back lower in global bond yields hasnt helped, nor has this mornings weak US housing data and a slew of option expiries centered around the 108.30 strike (1.3blnUSD). BOJ governor Kuroda spoke earlier today but his comments were not market moving. More here from Reuters.

USDJPY DAILY

USDJPY HOURLY

US 10YR BOND YIELD DAILY

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