May 9, 2024
- BoE leaves rates unchanged in a split decision.
- BoC Financial Stability Review ahead
- US dollar opens mixed but little changed.
FX at a Glance
Source: IFXA/RP
USDCAD Snapshot: open 1.3729, overnight range 1.3707-1.3738, close 1.3722
USDCAD did a slow dance in a narrow range overnight with traders looking for direction. They won’t get it today as the only economic data of note is the weekly US jobless claims number. The release of the Bank of Canada Financial Stability report is unlikely to cause a stir, either.
However BoC Governor Tiff Macklem’s accompanying press conference could open a few eyes if he discusses monetary policy.
WTI oil prices inched higher in a narrow 79.14-79.80 range. The EIA announced that weekly crude inventories fell by 1.3 million barrels which was close to expectations.
USDCAD Technicals
The intraday USDCAD technicals are attempting to turn bearish if the current dip below 1.3710 can be sustained. If it does, it risks further losses to 1.3660. If not, USDCAD will revisit resistance at 1.3760. then look for a break above the 1.3780-90 area to extend gains to 1.3850.
The 4 hour chart shows a wedge formation with a 1.3690 acting as a pivot. Above that level risks further gains while below the line suggests a test of support.
For today USDCAD support is at 1.3690 and 1.3660. Resistance is at 1.3760 and 1.3810. Today’s range is 1.3680-1.3760.
Chart: USDCAD 4 hour
Source: DailyFX
A Pause That Does Not Refresh
The US said it would pause weapons shipments to Israel to protest Israel’s plans to eradicate Hamas from Rafah. The news is meant to appease left-wing media by demonstrating that the US government is really trying to broker a cease-fire. The real reason is that Egypt is terrified that a defeated cabal of fanatical zealots would seek refuge in that country. This isn’t a pause that refreshes, because Israel is the only friend the Americans have in the region. All the other countries hate them with a passion. The bombs will flow.
Equities Mark Time
Asian equity indexes closed mixed. In Australia’s ASX 200 fell 1.06% and Japan’s Nikkei 225 index dropped 0.40% while Hong Kong’s Hang Seng index climbed 1.22%. European bourses are modestly higher, but S&P 500 futures are slightly negative. The US 10-year Treasury yield is little changed at 4.512%.
EURUSD
EURUSD danced inside a 1.0726-1.0758 range in holiday-thinned markets. EURUSD topside is limited by the recent hawkish comments from Fed policymakers which contrast sharply from the ECB rate outlook. Today, EURUSD direction will be determined by the market reaction to the BoE decision and US weekly jobless claims data.
GBPUSD
GBPUSD was sitting very close to the top of its 1.2470-1.2502 overnight range until the BoE announced it would leave rates on hold at 5.25% in a 7-2 decision. Prices have since rebounded to 1.2511. BoE Governor Andrew Bailey said “With the progress we have made, to make sure that inflation stays around the 2% target, and is neither too high nor too low, it is likely that we will need to cut bank rate over the coming quarters and make monetary policy somewhat less restrictive over the forecast period.”
USDJPY
USDJPY traded with a modestly bullish bias in a 155.16-155.96 range. The BoJ Summary of Opinions revealed the usual concern about FX volatility impacting inflation trends. There was nothing that traders haven’t heard before, so the report was dismissed.
AUDUSD and NZDUSD
AUDUSD drifted in a 0.6565-0.6587 range and with a negative bias due to the dovish RBA tone earlier this week and because of broad US dollar demand. The currency pair did not get any benefit from China’s latest trade data.
NZDUSD dipsy-doodled in a 0.5993-0.6009 range with trading subdued due to a lack of fresh catalysts. Prices are underpinned by Monday’s OECD report suggesting persistent inflation limits the scope for the RBNZ to lower rates.
USDMXN
USDMXN shuffled in a 16.8981-16.9720 range. Mexican inflation is expected to have risen to 4.63% y/y from 4.42% previously. Monthly inflation is expected at 0.19% compared to 0.29% in March, while core inflation falls to 0.24% from 0.44%. Later in the day, Banxico is expected to leave interest rates unchanged while upwardly revising inflation forecasts.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1028 vs exp. 7.2238 (prev. 7.1016)
Shanghai Shenzhen CSI 300 rise 0.95% to 3664.56
China’s trade balance rises to $72.35b from $58.55b in March, exports rose 1.5% and imports rose 8.4%. The trade balance rose less than expected and the increase in exports was more than offset by the surge in imports.
Chinese property developer Country Garden Holdings said it would miss a yuan coupon payment, but it would be covered by China Bond Insurance Co.
Chart: USDCNY and USDCNH
Source: Investing.com
