December 2, 2024
- France budget drama weighing on EUR.
- Hawkish BoJ speak pressures USDJPY.
- US dollar opens with gains across the board compared to Friday close.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.4038, overnight range,1.3991-1.4049, close 1.4027
USDCAD recouped all of its Friday losses which were mainly due to month end rebalancing flows and remains at the mercy of broad US dollar sentiment and the Canadian and US interest rate outlooks. BoC rate cuts are expected to be more aggressive than those by the Fed which is why the CAD/US 10-year yield spread widened to -110 bps today.
Prime Minister Trudeau flew to Florida to pay homage to Donald Trump. He is on of many G-20 marionettes that are dancing to puppet master Trumps every whim. Trump is annoyed at what he calls Canada’s porous border. Trudeau’s plan to appease him is to launch a global ad campaign warning asylum seekers that making a claim is difficult.
WTI oil prices are at the top of its 67.97-68.91 range. Selling pressure that occurred on the back of the Israel/Lebanon cease fire evaporated when Syrian rebels invaded Aleppo. Prices were also underpinned following the increase in China PMI data which raised hopes for increased demand. Nevertheless, the risk of a new trade war lowering global demand is limiting gains.
US ISM manufacturing PMI is expected to rise to 47.5 from 46.5. There are no Canadian economic reports of note today.
USDCAD Technicals
The intraday technicals snapped the downtrend with the break above 1.4017 and that sets the stage for a retest of last week’s peak of 1.4178. Of course it won’t be a direct spike as there is resistance at 1.4080 and 1.4140.
Longer term, the uptrend line from the end of September remains intact while prices are above 1.3960
For today, USDCAD support is 1.4010 and 1.3980. Resistance is 1.4070 and 1.4110.
Today’s Range: 1.3970-1.4040.
Chart: USDCAD 4 hour
Source: Oanda.com
I’m Sorry, That Stink is Me
A stench not unlike a backed-up toilet following a chili festival is coming from the White House. President Joe Biden may be a lame duck, but he still has enough of his faculties to grant a “full and unconditional” pardon to his gun-toting, drug-addled, tax-cheating son. That proves that in the US, there is really one law for the rich, one law for the poor, one law for politicians, and no laws for Presidents or their families.
EURUSD
EURUSD traded negatively in a 1.0496-1.0574 range with France’s budget dilemma overshadowing and soft Eurozone economic data weighing on the single currency. The French parliament is at odds with the Prime Minister’s budget proposal, and Marine Le Pen’s National Party wants a non-confidence vote. Meanwhile, various ECB policymakers were chipping about the need to cut rates further.
GBPUSD
GBPUSD rallied in a 1.2679-1.2737 range due to EURGBP selling in the wake of the French political drama. Nationwide Housing Price data was higher than expected, but any positive sentiment from that news was erased when November PMI at 48 was weaker than forecast (48.6). S&P wrote that “conditions in the UK manufacturing sector deteriorated.” S&P painted a grim picture, writing: “With recent budget announcements on labour costs and employer national insurance likely to raise costs further in 2025, and geopolitical tensions heating up notably around the threat of increased global protectionism, manufacturers are left facing an environment of high costs, low demand and raised uncertainty for the foreseeable future.”
USDJPY
USDJPY is in the middle of its 149.50-150.75 range. Governor Ueda hinted at a rate hike in December but tempered the outlook by saying the “big question mark” is the US outlook. He said that economic data is supporting the BoJ forecasts.
AUDUSD and NZDUSD
AUDUSD traded sideways in a 0.6489-0.6515 range with gains capped by renewed US dollar strength. Retail Sales rose 0.6% m/m in October, which was more than expected, as were Building Permits, which rose 4.2% vs the forecast of a 2.1% gain. PMI was unchanged at 49.4.
NZDUSD traded in a 0.5890-0.5918 range supported by NZDAUD demand, but the topside was limited by ongoing expectations of another RBNZ 50 bp rate cut at the next meeting.
USDMXN
USDMXN remained adrift in a 20.3657-20.5032 range. Trading has been choppy after Trump said he had a “wonderful” conversation with President Sheinbaum and implied she offered concessions. Ms. Sheinbaum has a different recollection of the conversation. Trading was lighter than usual due to the US Thanksgiving holiday.
BTCUSD (Bitcoin)
BTCUSD lacked direction and traded in a 94,936-98,240 range. The proximity to 100,000 has attracted profit-taking after more than doubling in price since January 1, 2024.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC Fix: 7.1865 vs prev. 7.1877
Shanghai Shenzhen CSI 300 rose 0.79% to 3947.63
Caixin Manufacturing PMI rises to 51.5 in November (forecast 50.5, previous 50.3). Caixin Senior Economist Wang Zhe wrote: “it is worth noting that the downward pressure facing the economy remains prominent, marked by continued contraction of employment.”
The Biden Administration increased chip restrictions for China. They imposed export restrictions on 24 types of chipmaking equipment and three categories of software essential for semiconductor development.
Chart: USDCNY and USDCNH
Source: Investing.com
