October 17, 2024
- No surprise-ECB cuts 25 bps
- US consumers are still consuming.
- US dollar opens mostly higher from close-mixed compared to yesterday’s open.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3782, overnight range 1.3747-1.3786, close 1.3753
USDCAD popped to 1.3794 from 1.3777 following stronger than expected US data which supports the Fed’s plan for gradual easing.
Whoever said not to cry over spilled milk was obviously not a Canadian dairy products consumer. Canadian dairy prices are the highest in the G-7 and that is government policy. And in order to keep that dubious ranking, Canada dumped between 6.8 -10 billion liters of milk since 2012. In that same period, the price of a liter of milk surged about 60%. It is only a coincidence that Liberal power base is in Quebec which is where 40% of the milk is produced.-Just saying.
USDCAD continues to consolidate its recent gains with prices supported by divergent Bank of Canada and Fed monetary policy outlooks. The BoC is expected to cut rates faster and deeper than the Fed which is supporting USDCAD.
WTI oil prices are steady in a 70.08-71.11 range despites threats from Iran that they will retaliate if Israel retaliates. Round and round we go.
There are no Canadian economic reports today.
USDCAD technicals
The intraday USDCAD are bullish above 1.3750 looking for a break above 1.3790 to extend gains to 1.3850. A move below 1.3750 targets 1.3710.
Longer term, the USDCAD break above 1.3620 and subsequent peak at 1.3941 opened up a new trading band in the 1.3620-1.3900 range which gives will help to alleviate the overbought situation.
For Today, USDCAD support is 1.3750 and 1.3710. Resistance is at 1.3790 and 1.3840.
Today’s Range 1.3740-1.3830
Chart: USDCAD daily
Source: Investing.com
Trump Tariff Talk Bolsters Greenback
The odds that Donnie Trump returns to the White House are about 50/50, which is amazing considering his election loss behavior and 34 felony convictions. Nevertheless, half of America is buying what he is selling, which includes tax cuts and tariffs. The Peterson Institute for International Economics estimates Trump’s new tariffs would lower American incomes by 2 to 4%. In addition, the tariffs could tip the US into a recession. Nevertheless, investors are buying US dollars “just in case.”
US Data May Crash the ECB Party
The American consumer is still spending. Retail Sales rose 0.4% in September, topping the forecast for a 0.3% increase and the 0.1% increase in August. In addition weekly jobless claims rose less than expected (actual 241,000 forecast 260,000, last week 258,000). Taken together, the data suggests that the Fed is correct in not being in a hurry to lower rates. In addition, the Philadelphia Fed Manufacturing survey surged to 10.3 (forecast 3, September 1.7), which is further evidence of a healthy economy.
EURUSD
EURUSD dropped to 1.0835 from a pre-ECB statement level of 1.0870 after policymakers cut interest rates by 25 bps to 3.25%, which was universally expected. ING economists suggest that the decision was because the bankers may be far more concerned about the downside risks to economic growth in the region.
GBPUSD
GBPUSD is consolidating yesterday’s losses in a 1.2974-1.3005 range, then popped to 1.3023 in the wake of the ECB announcement which sparked some EURGBP selling. Further gains may be limited after the robust US data.
USDJPY
USDJPY dipsy-doodled in a 149.24-149.88 range overnight and is sitting where it closed in NY yesterday. The low was seen in Asia after Japanese trade data showed exports fell 1.7% after rising 5.5% in August.
AUDUSD and NZDUSD
AUDUSD rallied from 0.6660 to 0.6711 on the heels of a stronger-than-expected employment report, which took a 2024 interest rate cut off the table. Australia gained 64,100 new jobs compared to the forecast for a 25,000 increase. The unemployment rate was unchanged at 4.1%. The gains were capped after NAB Business Confidence data fell to -6 from -2. NZDUSD traded sideways in a 0.6044-0.6676 range, with prices weighed down by falling Chinese stock markets and broad US dollar strength.
USDMXN
USDMXN traded higher in a 19.8783-19.9555 range due to the lingering impact from the IMF downgrading Mexican economic growth in 2024 and 2025. In addition, fear of another Trump presidency is bolstering demand.
BTCUSD (Bitcoin)
Bitcoin consolidated in a 67,131-68,367 range with prices underpinned by expectations that the SEC will approve several spot Bitcoin ETFs.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1220, (prev. 7.1191)
Shanghai Shenzhen CSI 300 fell 1.13% to 3788.22
Chinese stocks are hammered after another policy meeting proved to be “all-bark-no bite.” The Minister of Housing and Urban-Rural Development offered all kinds of words about how authorities would stabilise the property sector, including the removal of purchase and sales restrictions. Nothing said hadn’t been said before and the CSI 300 got spanked.
Chart: USDCNY and USDCNH
Source: Investing.com
