September 27, 2024
- US Core-PCE Price Index rises 0.1% (forecast 0.2%)
- Canada GDP rise by 0.2% m/m in July.
- US dollar steady overnight but lower from Tuesday’s opening.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3479, overnight range 1.3464-1.3496, previous close 1.3465.
USDCAD was sidelined overnight. The currency pair was directionless as it drifted in a narrow band, and it underperformed against it commodity bloc peers. That was probably due to the slide in crude oil prices and the prospect of further losses.
WTI traded in a 67.06-68.14 range and is sitting at 67.84 in NY. The decline occurred despite some gulf coast production being shut down due to Hurricane Helene because traders fear higher supply from Saudi Arabia and Libya. It is too early to see any impact from China’s stimulus actions on its crude demand.
Canada’s economy grew at a sluggish 0.2% m/m pace which was still better than the 0.1% result expected. some suggest. While the services sector, led by retail trade, the public sector, and finance, posted gains, the modest uptick does little to inspire confidence in robust future growth. Goods-producing industries barely moved, with only a 0.1% increase.
Monday Canadian markets are closed. It is the day all Canadians are asked to reflect on the horrific injustices perpetrated by Governments and Church elders on the Indigenous population.
USDCAD technicals
The intraday USDCAD technicals are bullish above 1.3460, looking for a break above 1.3510 to extend gains to 1.3550. a break below 1.3460 suggests further losses to 1.3420.
Longer term, the monthly uptrend line from June 2021 remains intact while prices are above 1.3360.
For today, USDCAD support is at 1.3430 and 1.3410. Resistance is at 1.3510 and 1.3550.
Today’s Range 1.3430-1.3510
Chart: USDCAD monthly
Source: Oanda.
Thar She Blows
Hurricane Helene ripped through Florida overnight, knocking out power to millions. The storm is rapidly losing intensity and is now downgraded to a tropical storm. There was no hurricane-like reaction from the release of Fed favourite Core-PCE Price index. It rose just 0.1% m/m in August compared with estimates for 0.2%. The US dollar fell following the news as it keeps the 25-or 50 bp rate cut debate alive.
Equities Stimulated
China’s aggressive fiscal and monetary stimulus not only boosted Chinese equity markets, but also lifted other Asian indexes. Japan’s Topix climbed 0.73%, while Australia’s ASX 200 eked out a 0.10% gain. European bourses are in the green as well, with a 0.75% rally in the German Dax leading the pack. Meanwhile, S&P 500 futures are flat.
EURUSD
EURUSD traded in a 1.1125-1.1179 range overnight. This morning’s data showed that Economic Sentiment and Employment Expectations eased somewhat, supporting the case for the ECB to cut rates at its October 17 meeting.
GBPUSD
GBPUSD dipsy-doodled in a 1.3360-1.3420 range, with prices falling in Asia before drifting higher to 1.3394 in early NY. GBPUSD remains underpinned after the Bank of England’s “hawkish hold,” leaving rates unchanged but hinting at potential hikes due to persistent inflation.
USDJPY
USDJPY traded erratically in an entertaining overnight session. It closed in NY at 144.81, climbed to 146.49 on the latest round of Chinese stimulus, and then collapsed to 142.78 after pro-Asian NATO advocate Shigeru Ishiba was elected to replace Prime Minister Fumio Kishida, beating out Sanae Takaichi, who traders saw as bearish on the yen for wanting the BoJ to keep easing.
AUDUSD and NZDUSD
AUDUSD moved sideways within a 0.6868-0.6900 range overnight, supported by China’s stimulus measures but held in check by caution ahead of today’s US PCE data and the weekend.
NZDUSD traded in a 0.6296-0.6335 range, underpinned by the Chinese stimulus news.
USDMXN
USDMXN traded between 19.4715-19.7548 yesterday, peaking after Banxico cut its benchmark rate to 10.5% from 10.75%, as expected. Prices quickly retreated, with USDMXN settling into a 19.5297-19.6545 range overnight. The rate cut decision wasn’t as dovish as it appeared since it wasn’t unanimous. Deputy Governor Jonathan Heath voted to keep rates unchanged, suggesting further cuts aren’t a sure thing given the inflationary environment.
BTCUSD (Bitcoin)
Bitcoin rose from 63,927 to 66,101, riding the wave of China’s stimulus package and the surge in mainland Chinese stocks. BTCUSD technicals remain bullish above 62,280, eyeing a break above 66,000 for potential gains up to 70,000.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.0101 (prev. 7.0354)
Shanghai Shenzhen CS! 300 rose 4.47% to 3703.68
Chinese markets closed next week for Golden Week.
PBoC cut 7-day Repo Rate to 1.5% from 1.7%
The CSI 300 closed the week with a 16% gain and 7.94% YTD. Not bad for an index that was at 3,159.25 on September 13.
Chart: USDCNY and USDCNH
Source: Investing.com
