November 18, 2024
- G-20 meeting seeks ways to spend more money on climate change.
- Light US economic calendar this week-and US Thanksgiving is next week.
- US dollar opens consolidating Friday’s gains.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.4089, overnight range,1.4070-1.4103 close 1.4090
USDCAD is trading with a bullish bias but the mix of elevated speculative short CAD positions and domestic inflation data due out tomorrow have helped to contain gains. Nevertheless, the risk of new US tariffs on Canadian imports despite the USMC trade agreement and Trump’s dislike of Trudeau suggest that the Loonie is in for a rough ride.
WTI oil prices are trading in a 66.54-67.61 range with a risk of further downside due to slowing global demand and increased Opec production. That is also underpinning USDCAD.
There are no actionable Canadian or US economic reports today, leaving direction to be determined by Wall Street and US political headlines.
USDCAD Technicals
The intraday USDCAD technicals are bullish above 1.4040 and looking for a break above 1.4110 to target 1.4140. A break below 1.4000 would target 1.3960. A move below 1.4040 targets 1.4010.
Longer term, USDCAD is looking to fully retrace its COVID range by rising to 1.4665, which will be almost guaranteed if prices break above 1.4270. The 78.6% Fibonacci retracement level of the 1.4665-1.2035 Covid range is 1.4103.,
For today, USDCAD support is 1.4070 and 1.4040. Resistance is 1.4110 and 1.4140
Today’s Range 1.4070-1.4140
Chart: USDCAD daily
Source: Oanda.com
“…Jack Frost Nipping At Your Nose”
It has been almost two weeks since Hurricane Trump ripped across the US as Americans decisively repudiated the woke agenda. Stock markets soared, the US dollar rallied, and governments across the globe hunkered down to plan for Trump 2.0. The Fed didn’t quite rain on the parade, but Fed Chair Powell’s comments suggesting a slower pace of rate cuts, followed by relatively robust economic reports, sparked profit-taking on Wall Street on Friday. The US 10-year Treasury yield touched 4.50% Friday but eased to 4.47% today. Asian equity indexes closed mixed. Australia’s ASX 200 rose 0.18% while Japan’s Topix fell 0.73%.
It’s Not Barry Manilow’s Copa
Mr. Manilow’s COPA was about Lola, a “showgirl with yellow feathers in her hair,” but the COP29 version is all about money. People like Canada’s Environment Minister Steven Guilbeault are urging G20 governments to commit hundreds of billions of dollars to fight climate change while hoping that many of those dollars land in companies where he has a personal stake. After all, one must live large while saving the world.
EURUSD
EURUSD danced around in a 1.0530-1.0572 range. There were no actionable economic reports for the region. ECB President Christine Lagarde is speaking later today, but the reality is that it is US politics that are moving markets. Chunky option expiries between 1.0500-1.0520 and 1.0560 may contain price movements until after 10:00 am NY time.
GBPUSD
GBPUSD traded quietly in a 1.2610-1.2643 range in a quiet session with traders looking ahead to Wednesday’s inflation numbers. Analysts are divided as to whether signs of slowing inflation would be large enough to force the BoE to cut rates again. The Rightmove House Price Index fell 1.4% m/m in November but rose 1.2% y/y.
USDJPY
USDJPY opened at the low of 153.84, then spiked to 155.14 in early Asian trading before settling into a 154.30-155.12 range in Europe and early NY. BoJ Governor Ueda failed to give any clear indication that the BoJ will hike rates next month, which fueled the rally. In addition, the US 10-year Treasury yield flirted with Friday’s 4.50% peak, and traders overcame their fear of BoJ intervention and bought USDJPY.
AUDUSD and NZDUSD
AUDUSD drifted in the same 0.6440-0.6480 range seen on Friday as traders were sidelined awaiting more US political developments. AUDUSD gains may be limited due to fears that Trump’s planned tariff action against China will negatively impact Australian exports. NZDUSD traded defensively in a 0.5836-0.5876 range after NZ Business PSI data showed service sector activity remained in the contraction zone (actual 46, previous 45.7).
USDMXN
USDMXN consolidated Friday’s losses in a 20.3010-20.4460 range. Banxico’s upward revision to its inflation forecast served to lower the odds of another rate cut, especially after they cut rates to 10.25% on Thursday. Mexico is closed today for a holiday.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1907, prev. 7.1992
Shanghai Shenzhen CSI 300 fell 0.46% to 3950.38
Goldman Sachs and Morgan Stanley downgraded their outlooks for Chinese stocks in the aftermath of Trump’s election victory.
SCMP reports that China’s youth unemployment rate (16-24 age group) and excluding students is 17.1% in October a tad lower than the 18.8% seen in august.
Chart: USDCNY and USDCNH
Source: Investing.com
