October 25, 2024
- Canadian core retail sales slump
- Betting sites predicting Trump will trounce Harris
- US dollar mixed, steady and has a bullish bias.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3847, overnight range 1.3838-1.3857, close 1.3856.
USDCAD traded quietly and modestly higher in a dull overnight session. The focus is on the outlook for Fed monetary policy and the US election, with a Trump win seen as bullish USDCAD. Trump loves tariffs and is not really a fan of Trudeau. But to be fair, Trump is really only a fan of himself.
Canadian core-retail sales (ex autos,) fell 0.7% in August rather than rising 0.4% as forecast. Even so, FX markets did not care and USDCAD remained unchanged.
The Bank of Canada is expected to cut rates by 50 bps again in December while the Fed will reduce its benchmark rate by just 25 bps and the widening CAD/US interest rate differentials are limiting USDCAD losses.
USDCAD technicals
The intraday technicals are bullish and consolidating yesterday’s gains. A minor bullish flag formation (hourly chart) suggest that a break above 1.3860 will extend gains to the 1.3900-10 area, while support at 1.3820 should limit losses.
Longer term, the USDCAD uptrend from June 2021 remains intact while prices are above 1.3440 (monthly chart) and looking for a test of resistance at 1.4000.
Today’s Range 1.3830-1.3910
Chart: USDCAD monthly
Source: Investing.com
Polling Box Stuffing.
Main stream polling has the odds of a Trump or Harris evenly split. Bloomberg reports 48.5% of swing state voters would pick Trump, while 49.1% want Harris. A Wall Street Journal poll shows Trump ahead of Harris at 47 to 45.
Then there are betting polls were people put their money where their mouth is. A popular site is Polymarket and Trump is the hands-down favourite. Another site-RealClear Polling also pegs Trump as the clear cut winner. FX traders are also betting on Trump which is underpinning the greenback.
Source: Polymarket and realclearpolling.
Durable Data and Equities.
Yesterday’s US data supported the USD, showing the economy wasn’t as weak as expected. US Durable Goods Orders concurred with the ex-transportation component rising 0.4% m/m vs forecast -0.1%. Later the Michigan Consumer Sentiment Index (forecast 69) is on tap.
EURUSD
EURUSD traded between 1.0814-1.0838, consolidating October’s losses. ECB policymakers hint at a possible 50 bp rate cut in December. The euro found support from a better-than-expected Ifo Survey, showing improved sentiment among German companies, with the Ifo Business Climate Index rising to 86.5 in October.
GBPUSD
GBPUSD is range-bound at 1.2956-1.2987 ahead of the UK budget next week. Sentiment remains weak after a poor GfK Consumer Confidence report, which hit its lowest level of the year at -21. Speculation grows over fiscal policy changes, with the Labour government considering adjustments to Britain’s debt target.
USDJPY
USDJPY traded within a 151.46-152.11 range, influenced by mixed Tokyo inflation data and steady US Treasury yields. Bank of Japan Governor Kazuo Ueda sounded dovish, emphasizing the BoJ’s patient approach to risk analysis. The pair was further supported by optimism around US economic growth.
AUDUSD and NZDUSD
AUDUSD weakened in a 0.6618-0.6644 range due to USD strength, though comments from Australia’s Treasurer Jim Chalmers about a “soft landing” helped support prices. NZDUSD fell to session lows, trading between 0.5998-0.6019, as markets anticipate an RBNZ rate cut in November.
USDMXN
USDMXN traded quietly in a 19.7943-19.8535 range. Traders are cautious ahead of US election risks, with Mexico’s inflation unexpectedly rising, potentially delaying Banxico’s planned November rate cut.
BTCUSD (Bitcoin)
Bitcoin traded between 67,000-68,846, with market caution around the Fed’s interest rate outlook. US dollar weakness added pressure on the cryptocurrency.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1090 (prev. 7.1286)
Shanghai Shenzhen CSI 300 rose 0.70% to 3956.42
Chart: USDCNY and USDCNH
Source: Investing.com
