May 27, 2024
- Holiday’s in UK and USA sap market liquidity.
- EURUSD ignores German Ifo.
- US dollar consolidates Friday’s moves in narrow ranges.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3659, overnight range 1.3653-1.3671, close 1.3677
USDCAD is nursing its losses after a quiet overnight session and things won’t get any livelier today. Canada GDP data is due on Friday and the data may determine if the BoC cuts rates in June or waits until July. A June rate cut is only about 60% prices in, which means USDCAD could see a bit of volatility when GDP is released. It may even be more volatile if the US PCE price index surprises.
WTI oil prices are steady in a 77.73-78.28 range and are at the top of that band in NY. Traders are looking ahead to the June3 Opec meeting and US crude inventory data. Prices continue to be supported by expectations that Opec will extend existing production cuts.
The Canadian and US economic calendars are empty.
USDCAD Technicals
The intraday USDCAD technicals flipped to bearish on Friday with the move below 1.3670 and suggest that a retest of support in the 1.3630 area is likely. 1.3680 is now intraday resistance.
The longer term technicals showed USDCAD breaking above the downtrend line in the 1.3670-80 area on Thursday, which had guided prices lower since April 16. The break was not sustained and warns that the uptrend line, at 1.3605, which has been intact since January may be tested.
For today, USDCAD support is at 1.3630 and 1.3610. Resistance is at 1.3680 and 1.3710. Today’s range is 1.3630-1.3690.
Chart: USDCAD daily
Source: DailyFX
“Sis Boom, Bah.”
Gaily decorated floats, the sounds of marching bands, and the cadence of military veterans marching in step will echo throughout middle America today as Americans pay homage to those who died while serving their country. Financial markets are closed.
Elon is Goldfinger, the man with the Midas Touch
Greek mythology has a tale about King Midas who was granted a wish by the god Dionysus that everything he touched would turn to gold. Elon Musk appears to be the reincarnation of King Midas, although without the curse. His ideas have minted money since Zip2 Corporation in 1995 and include PayPal, Tesla, SpaceX, OpenAI, and Neuralink, to name a few. His latest venture, AI start-up xAI, just landed another $6.0 billion in funding, valuing the company at $24 billion. He truly has the golden touch.
Flip-Flopping rate outlook
The prospect that the Fed would ease rates earlier than expected improved on Friday. The Consumer Sentiment Index fell to 69.1 in the May 2024 survey, down from 77.2 in April and above last May’s 59.0. Inflation expectations for the next year eased modestly. The 1-year ahead eased to 3.3% from 3.5% while the 5-year eased back to 3.0% (exp. 3.1%) and that sent the US dollar tumbling.
EURUSD
EURUSD is trading sideways in a 1.0843-68 range. It was an very dull session due to the holiday in the UK which put many traders on the beach. The German ifo data failed to inspire , mainly because it was little changed from the previous report. EURUSD traded defensively after ECB Chief Economist Philip Lane increased the odds for rate cuts, saying “The best way to frame the debate this year is that we still need to be restrictive all year long. But within the zone of restrictiveness, we can move down somewhat.”
GBPUSD
GBPUSD was largely ignored and it traded in a 1.2733-1.2758 band. The currency pair continues to get a little support from speculation that the Bank of England will not cut interest rates until August. However, the support is fleeting as further rate cuts are expected in November and then in 2025.
USDJPY
USDJPY drifted aimlessly in a 156.66-157.02 band with traders dismissing comments by BoJ Deputy Governor Shinichi Uchida because he merely repeated what various officials have been saying for the past few months. He said, “While we still have a big challenge to anchor the inflation expectations to 2%, the end of our battle is in sight.”
AUDUSD AND NZDUSD
AUDUSD is at the top of its 0.6622-0.6650 range due to improved risk sentiment. Australia Retail Sales are due Tuesday followed by CPI data on Wednesday.
NZDUSD rose from 0.6113 to 0.6144, underpinned by lingering support from last week’s RBNZ statement which suggests New Zealand rates may remain higher for longer. The NZ government releases its budget on Thursday.
USDMXN
USDMXN is sitting at 16.6800 after trading in a 16.6630-16.7100 range. The intraday uptrend from last Tuesday is vulnerable, with a break below 16.6740 suggesting a further move lower to 16.5950. Analysts still expect Banxico to cut rates in June, albeit with less conviction than earlier.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1091 vs exp. 7.2367 (prev. 7.1102).
Shanghai Shenzhen CSI 300 rose 0.95% to 3635.71
Chart: USDCNY and USDCNH
Source: Investing.com
