April 28, 2024

  • USDJPY plunges-BoJ admits nothing.
  • FOMC meets Wednesday against backdrop of widespread market holidays
  • USD opens modestly lower vs majors.

FX at a Glance

Source: IFXA/RP

USDCAD Snapshot: open 1.3655, overnight range 1.3632-1.3672, close 1.3670.

USDCAD opened nearly unchanged from Friday’s opening level with direction at the discretion of broad global risk sentiment.  Friday’s Wall Street stock rally helped lift commodity prices and overshadowed firm US 10-year Treasury yields. The greenback traded lower against the majors and USDCAD went along for the ride.

Traders are looking ahead to February GDP data (forecast 0.3% (0.6% in January), due tomorrow.

WTI oil is trading in a 82.96-83.85 range with the topside capped by fresh talk of a Hamas/Israel ceasefire.

USDCAD Technicals

The intraday USDCAD technicals are bearish below 1.3680, looking for a move below 1.3620 to test 1.3550.  A break above 1.3680 suggests further  gains to 1.3800.

The 2024 USDCAD uptrend is intact while prices are above 1.3540 which is also where the 200 day moving average comes into play. As long as the uptrend line holds, the downtrend from April 16 is merely a correction.

For today, USDCAD support is at 1.3630 and 1.3590. Resistance is at 1.3680 and 1.3720. Today’s range is 1.3620-1.3690.

Chart: USDCAD 1 day

Source: Daily FX
Golden Years, Golden Week

Japan kicked off its Golden Week holidays today and Russia started a three-day “invade thy neighbor” celebration. Markets are closed in around one hundred and seventy countries on May 1. Canada and the USA are not included.

Huffing and Puffing but not Blowing the House Down

It is the calm before the storm and FX markets will be rangebound. The FOMC meeting is Wednesday, and it is unlikely to produce any fireworks, or any noise for that matter. Fed Chair Powell is on record for wanting to see evidence that inflation was on a clear trend lower, before cutting rates. He hasn’t seen anything yet but he is certainly not going to pivot to a tightening stance—yet.

EURUSD

EURUSD chopped about in 1.0692-1.0734 band. German April inflation data was a touch warmer than in March (actual 0.5% m/m vs March 0.4%) but below the 0.6% which was expected. The HICP reading was 2.4% y/y (previous 2.3%).  Earlier, the European Commission Economic Sentiment Industrial Confidence and Services Sentiment indicators were lower than expected.

GBPUSD

GBPUSD is dancing inside a 1.2479-1.2549 band with prices getting a bit of support after the softer than expected Eurozone sentiment indicators.  Traders are biding their time until Wednesdays FOMC decision.  Meanwhile, GBPUSD intraday technicals are negative below 1.2585, and looking for a retest of 1.2440.

USDJPY

USDJPY plunged from an Asian peak of 160.20 to 154.52. It was all do to intervention even though  the Bank of Japan refused to comment. The move was notable because it occurred even as Japanese markets were closed as it is the start of Golden Week.  Markets will remain closed until May 6. Friday’s US PCE -data surprised to the upside which boosted the US 10-year yield to 4.665% by Friday’s close. They are 4.636% in NY today  which has put a floor under USDJPY.

AUDUSD and NZDUSD

AUDUSD rallied to 0.6587 from 0.6527 to 0.6587 due to improved risk sentiment as Asian equity markets, including those in China, followed Wall Streets lead higher.

NZDUSD tracked AUDUSD gains and climbed to 0.5983 from  0.5942. Traders are awaiting the release of the New Zealand employment report tomorrow and hoping it provides some insight into the outlook for  NZ interest rates.

USDMXN

USDMXN traded in a 17.0925-17.2499 range as it consolidated gains following Wednesday’s US GDP data. Friday’s Wall Street equity rally helped improve risk sentiment and it put a cap on USDMXN gains. The USDMXN technicals are bullish with the uptrend from April 9 intact above 17.0210 and looking for a move above 17.6300 to extend gains to 17.9550.

FX high, low, open (as of 6:00 am ET)

Source: Investing.com

China Snapshot`

PBoC fix: 7.1066 vs exp. 7.2759 (prev. 7.1056)

Shanghai Shenzhen CSI 300 rose 1.11% to 3623.91.

Note: China close May 1, 2, and 3 for Labour Day (days?)

Chinese stocks have rallied for the past few sessions, helped by a report from Goldman Sachs last week  that suggests recent reforms could fuel a 40% rally in “A” shares (stocks traded in Shanghai and Shenzhen exchanges in RMB).

Bloomberg warns of a speculation in financial markets that China could devalue the yuan-in a big bang move. Bloomberg also noted that the devaluation angle is a “minority view.”

Chart: USDCNY and USDCNH 4 hour

Source: Investing.com