November 12, 2024
- Plenty of Fed-speak today.
- Trump Cabinet picks unnerving markets.
- US dollar soars on safe-haven demand.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3962, range since Friday, 1.3898-1.3967 Friday close 1.3915
USDCAD rallied on the back of broad-based US dollar demand. The re-election of Donald Trump shifts the narrative from “America as a fading power, long past its best before data and led by a cabal of elderly somewhat senile uber-left wind politicians to a revitalized, and combative America, although still led by a geriatric. Trump’s America first agenda and plans for tariffs on all imports into the US promises renewed trade wars and a global economic slowdown.
The Canadian economy will suffer under that scenarios and so will the Canadian dollar. The Bank of Canada needs to lower rates substantially to boost the economy, while the Fed doesn’t have that worry.
WTI oil traded softly in a 67.75-68.80 range. The risk of slowing global demand due to reduced economic growth from tariffs combined with Opec’s plan to increase production in January is weighing on prices.
USDCAD Technicals
The intraday USDCAD technicals are bullish while trading above 1.3920 which is guarding the uptrend line from the middle of October which comes into play at 1.3840. A break above resistance in the 1.3990-1.4005 range will target 1.4270.
The weekly chart shows the likely trading range if (when) USDCAD takes out resistance in the 1.4000 area.
For today, USDCAD support is 1.3920 and 1.3880. Resistance is 1.3990 and 1.4020.
Today’s Range 1.3920-1.4020.
Chart: USDCAD weekly
Head For the Hills
US dollar bears are on the run thanks to the prospect of Republican control of the Presidency, Senate, and the House. Trump is a loud, combative, and abrasive personality who rarely lets a fact get in the way of an argument. Markets are afraid that the picks for senior administration roles will reflect his personality. Senator Marco Rubio, tipped for Secretary of State, is a more polished version of Trump but known for wanting a tough stance on adversarial nations. Trump’s promise of new tariffs across the board is poised to derail global growth, and the US dollar is the preferred safe haven for investors.
Cautious Trading Day Ahead
There are no top-tier, actionable US data releases on tap today, but US inflation numbers are out tomorrow. In addition, there are four FOMC officials speaking today: NY Fed President John Williams, Dallas Fed President Lori Logan, Kansas City Fed President Jeff Schmid, and St. Louis Fed President Alberto Musalem.
EURUSD
EURUSD is under pressure and traded in a 1.0611-1.0663 range overnight. The increased divergence in Euro area and US economic outlooks is a major factor weighing on the single currency, in addition to widening EU/US interest rate differentials. German HICP rose 0.4% in October as expected.
GBPUSD
GBPUSD traded in a 1.2792-1.2874 range and is attempting to claw back some losses in NY, with prices rising to 1.2824. UK unemployment rose to 4.3% from 4.0% in the three months ending in September, while wage growth slowed, rising 4.8% compared to 4.9% previously. The data does not do anything to prevent the BoE from gradually cutting rates.
USDJPY
USDJPY reversed Friday’s losses and rallied from 152.44 to 154.16 overnight and is trading at 154.01 in NY. Prices are underpinned by steady US Treasury yields, with the 10-year yield sitting at 4.36% as traders downgrade Fed rate cut expectations. The BoJ doesn’t seem to be in any hurry to raise its benchmark rate, which is also a yen negative.
AUDUSD and NZDUSD
AUDUSD is at the bottom of its 0.6534-0.6582 band in early New York as the rising specter of global trade friction injects a note of caution into markets. Westpac Consumer Sentiment rose 5.3% to 94.6 in November compared to 89.8 in October. The NAB Business Confidence Survey rose from -2 to 5 in October, while Business Conditions were unchanged at 7%. NZDUSD dropped to 0.5938 from 0.5973 on concerns about the impact of Trump’s tariffs on global growth.
USDMXN
USDMXN traded higher in a 20.3364 to 20.5135 range, fueled by fears that Trump will follow through on campaign promises and slap tariffs on imports from Mexico. In addition, the Trump administration is expected to dramatically increase the number of “illegal immigrants,” which will put a damper on remittances. Banxico is not expected to defer the anticipated 25 bp rate cut on Thursday because of Trump’s re-election.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1927 vs (prev. 7.1786). November 11, 7.1786 vs exp. 7.1813 (prev. 7.1433)
Shanghai Shenzhen CSI 300 fell 1.10% to 4085.74.
Monday, China CPI monthly CPI fell 0.3% (forecast -0.1%) while the year-over-year result rose 0.3% compared to the forecast of 0.4%.
Donald Trump’s re-election is unnerving Chinese investors, and they became more nervous overnight after reports of Trump administration picks. Senator Marco Rubio is rumoured to be the next Secretary of State while Mike Waltz is being tipped as the National Security Advisor. Both men are know for anti-China rhetoric.
Chart: USDCNY and USDCNH
Source: Investing.com
