USDCAD and US 500 Index

The selloff in markets yesterday found a bottom in the European and US session and US markets were able to grind higher to finish down but well off of their lows. Today volatility may pick up as options expiry takes place and key decisions are made in the Brexit process. German Chancellor Merkel has said that there has been movement in some areas but that there is work to do on others. She added that Brexit talks have been intensive and constructive. Dutch PM Rutte has said that the UK needs to do more in order to get a trade deal. He referenced EU Brexit Negotiator Barnier who made it clear that talks will accelerate. He also said that he thinks UK PM Johnson will decide to continue with talks. UK Brexit Negotiator David Frost said yesterday that he was surprised that the EU didn't pledge to intensify discussions yesterday. On 7 September, UK PM Johnson highlighted today as a key decision day on whether to continue negotiations or not. It would appear that the EU are waiting to see if PM Johnson commits to continue negotiations before expending anymore energy in the process. As a result, markets will be sensitive to Brexit headlines today. Germany’s Roth has said this morning that they want a Brexit deal but not at any price. He added that the atmosphere is constructive at the working level but we have not made any progress in recent months on the main topics. There is a chance that any progress today comes after the markets close or that talks drag over into the weekend. Japan’s new PM Yoshihide Suga has painted a gloomy picture of his county’s economy, saying that the economy remains in a severe state. He added that he wants to make sure that the Olympics happen next year and Japan must now combine controlling the virus with improving the country’s economic activity. He also said that his government will continue to provide economic aid to businesses and people. The Japanese 225 has closed lower by -0.41% in today’s session. The Hang Seng is trading up by 1.0%. The Shanghai Composite is trading up by 1.1%. Gold is trading at 1902.00 while USDJPY is trading at 105.260.

On today’s calendar the IMF is to meet today for their bi-annual meeting. In the afternoon, the US Retails Sales data will take the focus off markets and this is expected to rise slightly to 0.7% from 0.6%.



The USDCAD pair is now trading around the 1.3233 level having fallen back from the March high of 1.4668 after having previously found support around 1.3233. The pair broke support but has moved higher yesterday to 1.3260. The 1.3420 level may be resistive above 1.3300. The 1.3500 may provide resistance ahead of the 1.3600 level. Further resistance may be seen at the1.3646 lower high, the 1.3670/1.3686 area followed by the 1.3700 level and the 1.3750 zone of consolidation from late May. The 1.3860 former area of support may now be resistive ahead of 1.1400. The chart contains potential resistance at the 1.4100 round number followed by 1.4141, 1.4180, the 1.4250 area and the 1.4298/1.4300 zone. The previous lower high formed at 1.4173 and this may also provide a level to lean against, with a breakout targeting the 1.4400 level. Beyond this the 1.4424 level is followed by 1.4500 and 1.4560. The high created at 1.4660 represents the resistance level to beat, followed by potential resistance at the 1.4700 level. The next area may prove to be resistive at 1.4750. Beyond this the 1.4800 area may also create an interest for traders. A break above these levels might seek to test 1.4900. Beyond this the 1.4950 level comes into play followed by 1.5000.

Support for the pair was tested around the 1.3000 area after price failed to remain above the 1.3130 level. Support has been broken at 1.3250 and the market may now try to use the 1.3200 area. The 1.3126 may also provide support. Under the current price level the 1.3100 level and the 1.3050 area may be used as potential support ahead of the 1.3000 round number. The 1.3034 area has also been used as support in January ahead of the large round number at 1.3000. Traders may potentially lean on this area followed by the 1.2953 level if the round number is broken, with further selling potentially opening the way to 1.2900, 1.2800 and 1.2750.

US 500 Index


The US 500 Index price is currently trading around the 3482.00 area and has potentially strong resistance at 3490.00 and the 3500.00 round number. The 3540.00 area may also provide resistance followed by 3550.00 as this month’s high. Further resistance may be found around the 3573.00 area, followed by 3590.00 and the 3600.00 round number. A break higher may see to engage the 3620.00 area following a break of the 3645.00 area. Price retraced yesterday after hitting support at the 3440.00 level. A loss of this area may open the way to retest 3400.00 and the previous all time high at 3396.00, followed by a fast move down to 3340.00. The 3300.00 area also featured as support and resistance on the chart along with 3260.00 ahead of the 3235.00 as the June high.

Support may also come into play around 3220.00 and 3200.00 in the event of a deeper selloff. Below these levels 3194.00 is followed by 3190.00 and 3181.00. These levels are in turn followed by the 3155.00 area, the 3140.00 level, the 3120.00/3115.00 area and the 3100.00 round number area. The 3070.00 area has been used as support and this is followed by further potential supports at 3061.00, 3044.00 and the 3017.00 level. The round number 3000.00 area may also offer support followed by the 2980.00 and 2950.00 levels. The 2908.00/2900.00 area may be used as a higher low in the event of a pullback. Further support may be found in the 2860.00/2850.00 area, followed by the 2820.00 area and the 2800.00 round number. Below these levels the 2750.00 area is followed by 2725.00 ahead of the 2700.00 round number. The 2645.00 area may also provide support to price action followed by the 2500.00 area and the April low at 2240.00/2437.00. The 2400.00 level is followed by potential support at 2345.00. Below these levels the 2300.00 area and the low at 2275.00 may potentially be used by buyers. The 2250.00 level might follow as potential support and this is in turn followed by the 2200.00 round number. Below this the 2120.00 may be used as support followed by the 2100.00 area. The 2000.00 area could possibly see buyers attempt to enter the market in the event of another selloff.

Philip Konchar

Core Spreads

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