September 11, 2024
- JPY recovers all of its 2024 losses.
- CPI data keeps Fed on track for 25 bp rate cut
- US dollar mixed since Tuesday, weaker overnight.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3588, overnight range 1.3556-1.3579, previous close 1.3610
USDCAD traded lower on the heels of the Harris/Trump debate and prices are close to giving back all of yesterday’s gains. Traders sold US dollars after deciding that Kamala Harris edged out Trump in the debate because Trump’s tariff strategy is viewed as US dollar bullish.
WTI oil remains on the defensive but traded slightly higher in a 65.92-67.58 range overnight. Prices are getting a bit of support on reports that 24% of Gulf of Mexico crude and natural gas production are offline due to Hurricane Fancine,
USDCAD squeaked higher after the inflation data all but eliminated the risk of a 50 bp rate cut by the Fed.
There are no Canadian economic reports today.
USDCAD technicals
The intraday USDCAD technicals are bearish below 1.3610 and looking for a retest of 1.3540. A move above 1.3610 targets 1.3650.
The four hour chart shows a bullish flag pattern suggesting and upside risk to 1.3650, while prices are above 1.3560. A move below 1.3560 suggests further losses to 1.3510, then 1.3460.
For today, USDCAD support is at 1.3560 and 1.3510. Resistance is at 1.3610 and 1.3650.
Today’s Range 1.3530-1.3630
Chart: USDCAD 4 hour
Source: Investing.com
Jumbo Rate Cut Hopes Deflated
US Core-CPI came in as expected, rising 3.2% y/y, which was the same as in July. Headline CPI rose 2.5%, a tick below the 2.6% expected and well below 2.9% seen in July. The report shows that inflation is falling gradually and greatly reduces the odds for a 50bp rate cut which CME futures traders put at 15.0%.
EURUSD
EURUSD is at the top of its 1.1016-1.1052 range and then retreated to the low after the inflation report. Traders are now looking to the ECB monetary policy meeting tomorrow. The ECB outlook is key, especially if they temper easing sentiment. If so, another retest of 1.1150 is likely.
GBPUSD
GBPUSD traded with a modest bid in a 1.3070-1.3112 range in Asia, then reversed the move in Europe, following disappointing UK economic growth data and dropped to 1.3058, post-US CPI. July GDP was flat (0.0%), the same as June, but below the 0.2% m/m forecast. Industrial Production and Manufacturing Production were also below expectations.
USDJPY
USDJPY has given back all of its gains since the beginning of the year, a roughly 30% round trip. The overnight plunge to 140.72 from 142.48 was triggered by hawkish comments from BoJ official Junko Nakagawa. She kept the door open for a September 20 rate hike when she said, “Given real interest rates are currently very low, we will adjust the degree of monetary support, from the standpoint of sustainably and stably achieving our 2% inflation target, if our economic and price forecasts are met.” Prices rebounded to 142.44 after the US inflation data.
AUDUSD and NZDUSD
AUDUSD drifted aimlessly within a 0.6640-0.6670 range ahead of this morning’s US inflation report. Gains remain capped by persistent concerns over China’s economic growth, which is weighing on commodity prices. NZDUSD mirrored this lethargy, trading in a narrow 0.6136-0.6158 range.
USDMXN
USDMXN rallied before sinking from 20.1530 to 19.8232 on the heels of the US CPI data. Concerns about Mexican judicial reforms, combined with softer-than-expected Mexican inflation data, initially supported the peso. However, the tone shifted after Kamala Harris appeared to outshine Donald Trump in the presidential debate. The inflation figures keep Banxico on course for a 25 bps rate cut to 10.50% on September 26.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1182 vs exp. 7.1198 (prev. 7.1136).
Shanghai Shenzhen CSI 300 fell 0.30% to 3186.13
Chart: USDCNY and USDCNH
Source: Investing.com
