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USDCAD at 2019 Lows, EURUSD Dips on ECB Dove, GBPUSD Stabilises

USDCAD at 2019 Lows, EURUSD Dips on ECB Dove, GBPUSD Stabilises

Justin McQueen, Strategist

MARKET DEVELOPMENT – USDCAD at 2019 Lows, EURUSD Dips on ECB Dove

DailyFX 2019 FX Trading Forecasts

USD: FX pairs have held relatively tight ranges in this holiday thinned trading session. Alongside this, sizeable option expiries in major USD pairs have also kept price action relatively subdued. In particular, this has been observed in EURUSD with $6.2bln worth of vanilla options from 1.1265-1.1315. That said, the Euro did pullback from better levels, which in turn supported the greenback following very dovish commentary from ECB’s Rehn who stated that further monetary stimulus is now needed until there is an improvement in inflation and economic prospects, adding that the slowdown is no longer temporary.

GBP: The Pound continues to hover around its recent lows, following BoE Governor Carney’s recent cautious comments. However, GBPUSD has managed to stabilise with support stemming from the GBP October 2016 flash crash trendline.

CAD: Following yesterday’s close below the prior YTD low at 1.3068, USDCAD has grinded lower. Eyes are now firmly placed on a test of the 1.3000 level. However, little scheduled for the rest of the session, focus turns towards the Canadian jobs report.

EM FX: Global bond yields continue to collapse with German Bunds now yielding less that the ECB’s deposit rate (-0.4%), as such, with expectations of fresh monetary stimulus from the ECB and the Fed, carry trade has begun to look attractive, which in turn has seen high yielders (ZAR, TRY, BRL) benefit, particularly given the low FX volatility.

USDCAD at 2019 Lows, EURUSD Dips on ECB Dove, GBPUSD StabilisesUSDCAD at 2019 Lows, EURUSD Dips on ECB Dove, GBPUSD Stabilises

Source: DailyFX, Thomson Reuters

IG Client Sentiment

USDCAD at 2019 Lows, EURUSD Dips on ECB Dove, GBPUSD Stabilises

How to use IG Client Sentiment to Improve Your Trading

WHAT’S DRIVING MARKETS TODAY

  1. ECB Top Job: Will Lagarde Continue the Bank’s Dovish Approach?” by Daniela Sabin Hathorn , Junior Analyst
  2. Currency Volatility Implosion Sees US Dollar Pairs Potentially Under-pricing NFP Risk” by Justin McQueen, Market Analyst
  3. EURUSD Price Heading For Key Support Levels, Bounce Possible” by Martin Essex, MSTA , Analyst and Editor
  4. Using FX To Effectively Trade Global Market Themes at IG” by Tyler Yell, CMT , Forex Trading Instructor

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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