Agility Forex Daily

USDCAD open: 1.3857, overnight range 1.3832-1.3861, close 1.3845

USDCAD found support at 1.3820 yesterday and drifted higher overnight, with demand underpinned by slightly hawkish FOMC minutes. However, since FOMC members thought it was too early to properly assess the impact of Trump’s Iran war on the economy, it makes sense for traders to ignore the minutes.

Mark Carney’s government is another step closer to a majority after an MP from Sarnia-Lambton crossed the floor. MP Marilyn Gladu is the same woman who backed a petition calling for automatic by-elections when MPs change sides. She is also a noted anti-Covid vaccine crusader. Carney may want a majority government, but he should have some standards.

WTI oil prices are trading in a 96.30-99.67 range due to cracks in the US and Iran ceasefire deal as Israel continues to bomb Lebanon. The Strait of Hormuz may be open, but few, if any, ship captains want to navigate what they think is a heavily mined waterway. Russia is a winner, as Trump’s war doubled the Kremlin’s oil tax revenue to $9.0 billion.
There are no Canadian economic reports on tap today.

USDCAD Technical Outlook

The intraday USDCAD technicals are bearish below 1.3890 and looking for a break below 1.3820 to target 1.3770. A move above 1.3890 opens the door to 1.3940. The 4-hour chart shows the RSI has dropped to 43 from near overbought levels, suggesting fading upside momentum and a shift toward consolidation.

The medium-term USDCAD outlook is neutral to slightly bearish following repeated failures ahead of the 1.4000 area. However, the downside is protected by support from the 100 and 200-day moving averages at 1.3817 and 1.3820.  A decisive break below 1.3810 would puts 1.3620 in play while resistance in the 1.3940–1.4000 zone should cap rallies.

For today, USDCAD support is at 1.3830 and 1.3810. Resistance is at 1.3890 and 1.3940.
Todays range 1.3820-1.3920.

FX Heat Map (6:00 am) one week

FX  open high low 6:00 am

 Cracks in the Ceasefire

Iran is accusing Israel of violating three points in the 10-point ceasefire agreement, including attacking Lebanon. JD Vance says Lebanon was not part of the agreement.
Nevertheless, no ships are sailing through the Strait of Hormuz.

FOMC Minutes Preach Patience

The Fed left rates unchanged on March 18, and policymakers said there were growing risks to labour markets and inflation. Some members said they were seeing a risk of prolonged higher inflation and wanted the statement to reflect two-sided risks, which gives the minutes a hawkish bias.

Data in the Spotlight

Today’s US data was a bit of a mishmash but the fact that it is stale alongside the current geopolitical issues explains the markets muted reaction. Q4 GDP was weaker than expected, rising 0.5% y/y (Forecast 0.7%, Previous 0.7%).

Core PCE rose 0.4% m/m, as expected and Initial Jobless Claims rose to 219,000 from 203,000 (Forecast 210K).

Taking Stock

Asian equities closed mixed. Australia’s ASX 200 gained 0.24% while Japan’s Topix lost 0.90%, and Hong Kong’s Hang Seng fell 0.54%.

As of 5:30 am PT, European markets are giving back some of yesterday’s gains. The German DAX is down 1.14%, the French CAC 40 has lost 0.60%, and the UK FTSE 100 is down 0.30%. S&P 500 futures have lost 0.23%, the 10-year Treasury yield is 4.295%, the DXY is 98.91, and gold (XAUUSD) is 4,742.33.

EURUSD

EURUSD consolidated yesterday’s gains in a 1.1651-1.1679 range. Positive risk sentiment from the US and Iran ceasefire is being tempered by Iran’s claim that Israel has already violated the agreement. Oil prices remain elevated, and very few ships are daring to transit the Strait of Hormuz. Germany’s industrial production was already under pressure before the Iran war, falling 0.3% m/m compared to forecasts for a 0.9% gain. The intraday EURUSD technicals are bullish above 1.1590 and looking for a break above 1.1730 to target 1.1840.

GBPUSD

GBPUSD traded in a 1.3381-1.3415 range. Prices are supported by hopes that the US and Iran ceasefire will hold, but traders are not willing to buy into that hope very aggressively. Gains were also hampered by the somewhat hawkish bias in the FOMC minutes.

USDJPY

USDJPY climbed, rising from 158.49 to 159.11 and is near the top of that band in NY. Traders are unhappy with the still-high oil prices and the lack of cargos moving through the Strait of Hormuz. The slightly hawkish tone in the FOMC minutes added additional support.

AUDUSD

AUDUSD traded sideways in a 0.7023-0.7050 range. AUDNZD sales limited gains after hawkish comments from RBNZ Governor Anna Breman. She said she would hike rates in response to rising inflation.

USDMXN

USDMXN consolidated yesterday’s losses in a 17.4263-17.4913 range. Mexican consumer confidence ticked lower in March (actual 44.1 vs 44.5) due to the US/Iran hostilities. March core inflation is expected to rise 0.4% m/m, a tad lower than the 0.46% seen previously. Banxico releases the minutes from its March 26 meeting.

China

USDCNY Fix:  6.8649 vs exp. 6.8315 (Prev. 6.8680)

Shanghai Shenzhen CSI 300 fell 0.64% to 4,566.22

Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics Tradingview