April 15, 2024
- US Retail Sales are stronger than expected.
- Risk aversion ebbs after Iran attack fails.
- USD consolidating Friday’s gains but opened lower than where it closed.
FX at a Glance
Source: IFXA/RP
USDCAD Snapshot: open 1.3739, overnight range 1.3734-1.3783, close 1.3776.
USDCAD got trashed on Friday but managed to recoup some of its losses overnight. The failure of Iran’s attack on Israel and Israel’s failure (so far) to avoid retaliation led to an easing of risk aversion sentiment. Canada may not be out of the woods yet. Iran may have stopped firing missiles but the Liberal government is far from finished dropping new debt bombs. RBC warned that Canada’s AAA debt rating is at risk.
Canada CPI is due Tuesday, and the headline number is expected to rise 0.7% m/m in March compared to 0.3% in February. If so, it will be harder for BoC Governor Tiff Macklem to justify cutting rates in June, like he hinted he would do.
WTI oil prices have dropped to 84.92 from 87.54 as fears of supply disruption dissipated.
Canada Manufacturing were as expected at 0.7% but Wholesale sales were disappointing. (actual 0% vs forecast =0.8%).
USDCAD Technicals
The intraday USDCAD technicals are bullish above 1.3705, looking for a break above 1.3780 to extend gains to 1.3860. A break below 1.3705 suggests a retest of support at 1.3650.
The longer term uptrend line comes into play at 1.3630 and while prices are above this level a test of the 1.4000 is likely.
For today, USDCAD support is at 1.3730 and 1.3680. Resistance is at 1.3780 and 1.3850. Today’s range is 1.3690-1.3780.
Chart: USDCAD 4 hour
Source: DailyFX
I Ran
“And I ran, I ran so far away.” A Flock of Seagulls sang those lyrics in 1982 and so did thousands of Israeli’s on Saturday after Iran’s well-telegraphed attack. Soon, Tehran may be humming the same tune.
As attacks go, Iran’s was a total failure. Such being the case, western “leaders” like French President Macron urged Israel to show the same kind of restraint that France showed against Germany on May 9, 1942. He even offered to supply dozens of “Drapeau Blancs.”
Earnings and data
Traders are keeping an eye on Middle East developments, but their focus is on the start of US Q1 earnings and any data that will alter the existing Fed interest rate outlook. US Retail Sales were stronger than expected, rising 0.7% m/m (forecast 0.3%) and is just another piece of data showing the strength of the US economy. No need to cut interest rates yet.
EURUSD
EURUSD peaked at 1.0732 on Friday, dropped to 1.0622, then traded in a 1.0633 to 1.0665 range today. Prices are under pressure because the Fed is only expected to cut rate once (if at all) in 2024, a view that was reinforced today by the robust retail sales data. Meanwhile, ECB officials have indicated a June rate cut is in the cards. The intraday EURUSD technicals are bearish below 1.0720.
GBPUSD
GBPUSD is struggling to recoup Friday’s losses and traded in a 1.2441-1.2500 range. The US retail sales report weighed on prices while traders a re looking ahead to Tuesday’s employment data.
USDJPY
USDJPY is rallying, rising from 152.98 to 154.41 in NY, thanks to strong retail sales and soaring Treasury yields. The US 10-year yield climbed from 4.49% at Friday’s close to 4.61% after today’s US data. The Bank of Japan is nowhere to be seen, perhaps waiting until short USDJPY traders loose enough to make them close positions.
AUDUSD and NZDUSD
AUDUSD is steady in a 0.6460-0.6493 range from 0.6460 on the back of a reduction in global risk aversion..
NZDUSD plunged to 0.5933 from 0.6011 on Friday but managed to claw back some losses and is in the middle of its 0.5127-0.5154 overnight range in NY. News that NZ Services PMI dropped into contraction territory (actual 47.5, previous 52.6) weighed on the currency. The BNZ senior economist wrote “combining today’s weak PSI activity with last week’s similarly weak PMI activity, yields a composite reading that would be consistent with GDP falling below by more than 2% compared to year earlier levels.”
USDMXN
USDMXN traded lower in a 16.5617-16.6850 range and fell to 16.5412 before rising to 16.5908 after the US retail sales data. The long term USDMXN downtrend line from October 20, was tested on Friday, but it held.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.0967 vs exp. 7.2365 (prev. 7.0968).
Shanghai Shenzhen CSI 300 rose 2.11% to 3549.08.
Mainland Chinese stocks soar on the back of recent government actions to tighten stock listing criteria and strengthen the supervision of dividend payments.
Chart: USDCNY and USDCNH 4 hour
Source: Investing.com
