EUR/USD is in danger of forming a double top after the failure at 1.21. The New Zealand dollar was the top performer while the euro lagged. Japan returns from holiday Tuesday. There are currently 7 Premium trades in progress, 4 of which are in profit, 2 in a loss and 1 unchanged.
EUR/USD slid 60 pips to 1.1960 on Monday in a soggy start to the week. The record net long in CFTC positioning was the talk of the trade and surely made a few longs nervous.
The technicals are another reason to worry as a potential double top coincides with the completed inverted Head-&-Shoulder formation along the September high of 1.2092. The weakness emerges despite upbeat eurozone retail sales and business confidence data.
In the US, there was also a dovish hint from Atlanta Fed President Bostic who said he thinks the FOMC should hike 2-3 times this year rather than 3-4 but his comments didn’t have an effect on the market.
In terms of economic data, the main headlines emerged from the Bank of Canada’s business outlook survey. It showed increasing optimism from businesses and a line from the central bank saying that excess capacity has been absorbed, except in the resource sector.
The report solidified calls for a BOC hike next week, with the probability up to 86%. See Ashraf’s detailed piece on the loonie & CAD here. What’s also more likely is a hawkish statement and a return to the ‘sunny’ Stephen Poloz from early in his term. If so, the loonie could continue back down to its 2017 lows.
The S&P 500 rallied for a fifth day to another record at 2747.
Looking ahead, Japan returns from holidays and that will put a renewed focus on the yen. The November report on Japanese labor cash earnings is due at 0000 GMT and forecast to show just a 0.6% y/y rise.
