November 14, 2024
- Greenback gains powered by Trump.
- Fed officials sound more cautious about rate cuts.
- US dollar extends gains.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.4013, overnight range,1.3970-1.4020 close 1.4002
USDCAD broke the 1.4000 barrier yesterday and then made it a decisive breach overnight. Traders like “round numbers” because often, a move either side of a “0000” level is a precursor to sustained gains (or losses). The last time USDCAD was at this level was the COVID era in May 2020. Today, it is a tariff-fear pandemic caused by President-Elect Trump. Traders fear that wholesale tariff applications are inflationary, and that has fueled a 3.5% rally in the US dollar index (DXY) since November 5.
Trump is not the Canadian dollar’s only negative. The dovish expectations for Bank of Canada interest rates are leading to wider CAD/US interest rate spreads. The 10-year spread is -115.6, and the 2-year spread is 112.4. That’s because bond traders fear the inflationary impact of tariffs and have boosted the 10-year Treasury yield to 4.49% overnight.
And if that’s not enough, Canada’s Environment Minister, Steven Guilbeault, chose to ignore Trump’s plans to drastically ramp up fossil fuel exploration and production while easing or eliminating Biden-era climate change regulations. Instead, our homegrown climate zealot is spending $2.0 billion on a climate-centered investment platform.
The delusional minister said, “Canada looks forward to seeing the range of projects that will give people in developing countries a greater level of security and well-being in the face of a rapidly changing climate.” The people in the targeted regions said, “Screw that—we want food and healthcare.”
Meanwhile, in Toronto, City Council has found a way to deal with massive numbers of homeless and homeless camps in the downtown core. It was simple—invite Taylor Swift and her Era’s tour to town and use that event to make them vanish. How? It’s a secret, but residents in surrounding areas have noticed an influx of down-and-out people asking for money at every intersection and transit station in the area.
USDCAD Technicals
The intraday USDCAD technicals are bullish following the move above 1.3990 which will revert to minor support today. A break above 1.4020 sets the stage for a test of resistance at 1.4095.
The 4 hour chart shows an uptrend line from November 5 which is intact while prices are above 1.3920. The Bollinger Bands suggest a continuation of the uptrend while above 1.3925 with the scope for 1.4095.
For today, USDCAD support is 1.3990 and 1.3940. Resistance is 1.4040 and 1.4090
Today’s Range 1.3970-1.4060.
Chart: USDCAD daily
Go with the Flow
The US dollar is in high demand, and fighting this trend is a losing battle. Trump’s “America First” agenda has set a clear tone for the next four years, signaling “Trump’s way or the highway.” As the world’s largest economy, the US demands that nations doing business in America pay a premium. This premium brings inflationary risks, prompting bond traders to dump bonds.
What Will Jay Say?
Fed Chair Jerome Powell will join a panel at a Dallas Fed conference, where questions on Trump’s tariff plans impacting inflation and US rates are inevitable. Powell is expected to stay mum, as the spotlight remains firmly on Trump’s agenda.
Producer Prices Rise and Jobless Claims Fall
Weekly jobless claims fell by 6,000 to 217,000 and the producer prices index rose to 2.4% y/y from 1.9% and the latter number was revised higher. The data suggests that the Fed may be a tad less eager to cut interest rates in December, then they were yesterday.
EURUSD
EURUSD traded lower within a 1.0497–1.0568 range, pressured by diverging Fed and ECB policy outlooks and the superior performance of the US economy. The looming influence of “Tariffman Trump” weighs on prices. Technicals are bearish, targeting support at 1.0450. Weaker-than-expected EU industrial production data added to the negative sentiment.
GBPUSD
GBPUSD fluctuated in a 1.2630–1.2717 range, driven by broad US dollar strength as traders awaited key US economic data. The pair has robust support at 1.2615; a break here could extend losses to 1.2500.
USDJPY
USDJPY climbed from 155.34 to 156.25, spurred by a rise in the US 10-year yield to 4.48% overnight. The Bank of Japan’s apparent comfort with leaving rates unchanged continues to support USDJPY.
AUDUSD and NZDUSD
AUDUSD slipped from 0.6498 to 0.6453, weakened by US dollar strength and disappointing Australian employment data, with 15,900 jobs added, missing expectations. The unemployment rate held at 6.1%. Persistent concerns over China’s sluggish growth also weighed on AUDUSD. NZDUSD mirrored the Aussie, trading between 0.5850 and 0.5885.
USDMXN
USDMXN traded within a 20.5129–20.6795 range. The high followed news of Republican control in both the House and Senate, which emboldens Trump’s plan for mass deportations, impacting many Mexican nationals. Expectations of a 25 bps rate cut from Banxico today further pressured the peso.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1966, previous. 7.1991
Shanghai Shenzhen CSI 300 fell 1.73% to 4039.62.
Chart: USDCNY and USDCNH
Source: Investing.com
