June 19, 2024
- UK CPI nails BoE inflation target.
- Very quiet trading day ahead due to US holiday.
- US dollar opens with losses after weak data yesterday.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3717, overnight range 1.3705-1.3727, close 1.3719
USDCAD is at its overnight session low due to broad-based US dollar selling following yesterday’s American retail sales report. The selling pressure ramped up after a flock of FOMC policymakers opined positively about the direction of inflation. Fed Governor Adriana Kugler (and FOMC voter) was one of them. She said “If the economy evolves as I am expecting, it will likely become appropriate to begin easing policy sometime later this year.”
Her comments helped to knock the US 10-year yield down to 4.219% from 4.292% where it opened yesterday. Traders expect the first Fed rate cut at the September 18 meeting and another one in December. Even so, the CAD/US 10 year bond spread remained unchanged at -94.1 bp.
WTI oil prices are steady in a 80.31-80.88 range despite the API reporting US crude inventories rose by 2.264 million barrels last week.
The BoC Summary of Deliberations are released today.
USDCAD Technicals
The intraday technicals are bearish and in a descending channel while prices are below 1.3750 and looking for a move to the bottom of the channel at 1.3680.
The 4 hour chart shows the downtrend channel meeting with support from the beginning of June uptrend line at 1.3700. A break below 1.3700 targets the support congestion area in the 1.3640-60 area.
For today, USDCAD support is in the 1.3700 and 1.3660. Resistance is at 1.3740 and 1.3780. Today’s range is 1.3680-1.3740
Chart: USDCAD 4 hour
Source: DailyFX
America Takes a Break
America woke to Juneteenth Day which is a Federal holiday and many headed to a beach to beat the heat. The NYSE and NASDAQ are closed, bond markets are closed as are most banks, although FX desks may be lightly staffed. The US holiday means that Canadian markets will be very quiet.
Bad Boys, Bad Boys, Whatcha Gonna Do?
Portly North Korean leader Kim Jong Un met with his new (and only) bestie Dobie look-alike, Vladimir Putin, and exchanged pleasantries and gifts. Putin gave Kim a car which is a Russian-made Rolls Royce knock-off to help ensure North Korean munition shipments are not interrupted.
EURUSD
EURUSD rose from 1.0724 to 1.0754 in thin trading due to the US holiday. There were no top tier Eurozone economic reports today , however, the EU Commission releases the names of the countries which will face “excessive deficit procedure.” More importantly, the ECB is on track to cut rates in September while Fed officials suggest their first rate cut will be in December.
GBPUSD
GBPUSD traded higher in a 1.2697-1.2740 range. Trading was muted due to the US holiday and tomorrow’s Bank of England monetary policy meeting. The BoE will leave rates unchanged, and markets are pricing about a 43% chance for an August rate cut. a Ban in early NY. UK inflation fell back to the BoE target of 2.0%, for the first time in two years. However the services inflation component co rose for the second month in a row.
USDJPY
USDJPY drifted higher in a 157.60-157.99 range. The BoJ minutes revealed that central bankers were worried about how the weak yen would impact prices. Some policymakers said “Currency moves are among key factors affecting the economy and prices. If the economic and price outlook, or the risks, change, the BOJ must respond with monetary policy.”
AUDUSD and NZDUSD
AUDUSD traded with a modest bid in a 0.6654-0.6676 band. The currency pair is underpinned by somewhat hawkish comments from the RBA Governor and yesterday’s weak US retail sales report.
NZDUSD drifted in a 0.6129-0.6146 range in quiet trading. The NZ current account deficit widened to -$4.359. The news hampered upside moves after economists at ANZ Bank warned that the deficit was a risk to the New Zealand credit rating.
USDMXN
USDMXN consolidated yesterday’s losses in a 18.3621-18.4298 band overnight after higher than expected consumer spending in Q1. Private spending was 1.5% q/q compared to 0.9% previously. Traders are looking past political risk and instead focused on Mexico/US interest rate differentials which favour the peso.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1159 vs exp. 7.2482 (prev. 7.1148)
Shanghai Shenzhen CSI 300 fell 0.47% to 3528.75.
PBoC Governor Pan said the bank has structural tools worth CNY 7tln which is equivalent to 10% of the central bank’s assets which will be used to maintain policy stability.
Chart: USDCNY and USDCNH
Source: Investing.com
