January 8, 2025
- FOMC minutes in focus
- Weekly jobless claims expected to rise by 6,000
- US dollar finds its mojo and rises across the board.
FX at a Glance
USDCAD open 1.4371, overnight range 1.4339-1.4410, close 1.4370
USDCAD is tracking broad US dollar moves but prices are underpinned by domestic influences. The Canada 10 Year Government Bond yields 3.374%, while the United States 10 Year Government Bond is 4.712%, a difference of 133.8 bps . Trump’s threat of 25% tariffs is exacerbates the risk to the Canadian dollar because Canada does not have a functioning government. Trudeau wants to be Prime Minister, but his party and most of the country want him to go away. He said he was resigning but he will continue to be Prime Minister for at least 2 more months.
WTI oil prices traded in a 74.26-75.30 range and are in the middle of that band in NY. Prices are supported by hopes that China’s latest consumer support initiatives will bolster demand for oil. In addition the ongoing cold snap in the US has helped reduce crude inventories by 4.022 million barrels last week, according to API.
USDCAD Technicals
The intraday USDCAD are bullish after breaking above 1.4360 yesterday (hourly chart) with a move above 1.4410 (overnight peak) targeting 1.4450. Failure to take out the topside suggests a retest of support at 1.4340.
Longer term, the technicals are unchanged from yesterday. The October 2024 uptrend line is intact above the 1.4220-30 area and guarded by Fibonacci retracement support 1.4238. In addition, the RSI has retreated from overbought to neutral.
For today, USDCAD support is 1.4360 and 1.4340. Resistance is 1.4410 and 1.4450.
Today’s Range: 1.4270-1.4360
Chart: USDCAD daily
Greenback Catches a Bid
The US dollar’s two-day slide ended abruptly after economic data suggesting higher inflation led to aggressive bond selling. The 10-year Treasury yield jumped to 4.70% after starting the year at 4.59%. The ISM Services PMI index was higher than expected, but even worse, the prices component jumped 6.4%.
ADP Employment change data showed a gain of 122,000 in December, compared to the forecast of 140,000. Analysts suggest that this report combined with today’s 10,000 drop in weekly jobless claims to 201,000 means the US labour market is stagnating. The dollar remained bid following the news.
FOMC Minutes on Tap
The minutes from the December 19 FOMC meeting are released this afternoon. Analysts will pore over the document hoping for further insight into why policymakers only expect two rate cuts in 2025.
Jamie Cracks the Whip
JPMorgan Chase boss donned designer animal trader duds cracked a whip, and ordered remote and hybrid workers into the office five days a week. Is it because, as Mr. Dimon says, staff work better in person, or is it because JPMorgan is building a 60-story tower in Manhattan? Perhaps it’s because middle managers crave the return of in-office work, as it provides the perfect stage to fuel their superiority complexes—something that’s far harder to achieve over a Teams call. You know the type—buzzword-literate but productivity-challenged, thriving more on the optics of control than on actual results.
EURUSD NY open 1.0318, Overnight Range 1.0272-1.0358,
EURUSD traded poorly. The renewed selling pressure stems from sticky inflation readings in the US and weak German data. German factory orders fell 5.4% in November while retail sales dropped 0.6% m/m. Eurozone economic sentiment and employment expectations didn’t help. The ESI dropped in the EU by 1.7 points to 94.5, while the Employment Expectations Indicator (EEI) fell to 98.4. The EURUSD downtrend channel from November is intact while prices are below 1.0450.
GBPUSD:
NY open 1.2446, overnight range 1.2325-1.2494
GBPUSD plunged overnight. The pound was beaten up by fears that rising UK gilt yields would force the Chancellor of the Exchequer to increase taxes more than she already has after today’s auction finished 50bps higher than the rate assumed in the budget. Today’s US data and the risk that the FOMC minutes would exacerbate US dollar demand added to GBPUSD woes. A break below 1.2305 targets 1.2190.
USDJPY:
NY open 1.5833, overnight range 157.91-158.55
USDJPY traded higher on the back of rising US 10-year Treasury yields, which touched 4.71% today. Recent US data pointing to sticky inflation levels and BoJ/Fed monetary policy divergence is underpinning USDJPY.
AUDUSD:
NY open 0.6214, overnight range 0.6190-0.6242
AUDUSD sold off after the RBA’s preferred inflation measure, CPI trim, dipped to 3.2% y/y from 3.5%, which raised hopes for a 25 bp rate cut when the RBA meets on February 18.
NZDUSD:
NY open 0.5616, overnight range 0.5590-0.5642
NZDUSD suffered due to broad US dollar demand against the major currencies in the wake of yesterday’s US data and ahead of today’s FOMC minutes.
USDMXN:
NY open 20.3471, overnight range 20.3133-20.4908
USDMXN is dancing to the greenback’s tune with price action dictated by the outlook for US interest rates. However, the downside continues to be limited by ongoing concerns from Mexico’s judicial reforms and Trump’s tariff threat.
BTCUSD (Bitcoin)
NY open 96,052, overnight range 94,6489-100,940
Bitcoin traders were not happy with the surge in US interest rates, and BTCUSD is trading near its session low in NY.
FX high, low, open (as of 6:00 am ET)
China Snapshot
PBoC Fix: 7.1887 vs exp. 7.3435 (prev. 7.1879))
Shanghai Shenzhen CSI 300 fell 0.18% to 3782.22
Chart: USDCNY and USDCNH
Sources:
Yahoo Finance, Oanda, Investing.com, Google Finance
