Photo: BingAI
July 25, 2023
- German Ifo Survey slips for third month in a row.
- China stimulating its economy with words and action.
- USD opens nearly unchanged from Monday’s close
USDCAD Snapshot: overnight range 1.3149-1.3187, close 1.3168
USDCAD continues to play “Follow-the-Leader,” and the leader is the US dollar. The currency pair continues to bounce off support at 1.3150 and resistance at 1.3250, and that won’t change today.
USDCAD is slightly undermined by higher crude prices following China’s latest stimulus measures. WTI traded in a range of $78.31 to $79.05 per barrel, with the peak occurring after the Chinese announcements.
Today will be much like yesterday, with prices toing and froing in response to S&P 500 moves.
USDCAD Technical Outlook
The intraday USDCAD technicals are mildly bullish inside a 1.3150-1.3210 range , part of the larger 1.3090-1.3400 band that has contained price action since the beginning of June.
Things get more interesting on a a break below 1.3000 or a move above 1.3550
The uptrend line from May 2021 comes into play in the 1.2990-1.3000 zone.
For today, USDCAD support is at 1.3150-nd 1.3110. Resistance is at 1.3210 and 1.32500. Today’s range 1.3140-1.3230
Chart: USDCAD hourly
Source: Saxo Bank
G-10 FX recap
There is plenty of noise but little direction as markets countdown to Wednesday’s FOMC meeting.
Chinese authorities are yapping up a storm, trying to jump-start their economy, while stateside, Bloomberg notes that S&P companies with a market value of $16.3 trillion are reporting earnings.
Stock traders fear neither recession nor the Fed. They are convinced that policymakers will toss the rate-hike playbook into a dumpster and are looking ahead to the first rate cut in Q1 2024.
Japan’s Nikkei 225 and Australia’s ASX 200 indexes were left in the dust when the Hong Kong Hang Seng index soared 4.10%, and the Shanghai Shenzhen CSI index climbed 2.89%, following the latest round of stimulus measures.
European bourses are in the green but only marginally, while S&P 500 futures are unchanged. The US 10-year Treasury yield climbed to 3.904% from 3.857%.
EURUSD traded in a 1.1040-1.1086 range, just above its overnight session low. The single currency is suffering from more weak data. The German Ifo Survey fell for the third time in a row to 87.5 in July, from 88.5 in June. The ECB meeting is Thursday.
GBPUSD drifted lower in a 1.2811-1.2863 range, with prices garnering a modicum of support from speculation that ECB rates are getting close to a peak, while the peak BoE rate is a long way off.
USDJPY traded in a 141.20-141.73 range. Selling pressures from news of China’s stimulus were offset by the increase in Treasury yields. Friday’s BoJ meeting is shaping up to be a disappointment as officials have said there is no need to change monetary policy.
AUDUSD is at the top of its 0.6740-0.6777 range, buoyed by higher commodity prices and China’s stimulus plans. Australia’s CPI data is tomorrow, and it is expected to drop to 6.2% from 7.0%.
The US Case-Shiller Home price index fell 1.7%, a tad less than the 2.2% expected.
FX high, low, previous close
China Snapshot
Bank of China Fix: 7.1406 , forecast 7.2044, previous 7.1451
Shanghai Shenzhen CSI 300 fell rose 2.89% % to 3915.12.
PboC pushes back against rising CNY and announced the fix nearly 600 bps below forecast.
Authorities vow to support economy, announce further tweaks to stimulus targets, including developers and that news sparks huge stock rally.
Chart: USDCNY 6 month
Source: Bloomberg
