Picture iloveny.com Macey’s Thanksgiving Day Parade
- FOMC minutes open door to faster pace of taper
- Macey’s Thanksgiving Day parade in focus as US markets are closed
- US dollar trades quietly overnight, opens on mixed note
FX at a Glance:
Source: IFXA Ltd/RP
USDCAD Snapshot Open 1.2663-67, Overnight Range 1.2643-1.2674, Previous close 1.2667
USDCAD traded erratically in a 1.2650-1.2707 range yesterday following a series of US economic reports that painted a picture of a robust economy leading to some economists upwardly revising their Q4 GDP growth forecasts.
It wasn’t all “sunshine and unicorns.” Weekly jobless claims rose 199,000, which is a 52 year low. Economists dismissed the results as “dubious” do to the usual fluctuations around holidays.
Oil traders ignored the US data and a rise in weekly crude inventories following reports Saudi Arabia and Russia are pondering a pause to planned crude production increases in the wake of crude supplies from Strategic Petroleum reserves. Prices traded in a $77.80/barrel $78.82/b range overnight.
USDCAD trading activity will be extremely subdued with the US markets closed.
Technical view: The USDCAD technicals are bullish while prices are trading above 1.2550, looking for a test of the downtrend line from May 2020 which comes into play in the 1.2780-00 area. In the short term, a break below 1.2620 will extend losses to the 1.2550-60 area. The 100 day moving average is at 1.2559. A move above 1.2690 shifts the focus to 1.2750.
For today, USDCAD support is at 1.2620 and 1.2590. Resistance is 1.2690 and 1.2750. Today’s range 1.2620-1.2720
Chart USDCAD 4 hour
Source: Saxo Bank
G-10 FX recap and outlook
The US dollar traded quietly overnight. Traders did not want to get involved as today’s US holiday led to poor liquidity conditions.
The FOMC minutes from the November 3 meeting did not offer any surprises. The minutes noted the Fed was “prepared to adjust the pace of purchases if warranted by changes in the economic outlook.” Various policymakers have said the same thing in speeches since the meeting. Nevertheless, “taper pace” will be the key focus for markets ahead of the next few FOMC meetings.
Asia equity indexes closed with gains, and European bourses are trading modestly firmer. WTI oil prices are unchanged from yesterday, while gold is posting a small gain. The US 10-year yield is at 1.64%. The US dollar index is at a three-month peak of 96.73 and has room to rise further.
EURUSD ranged in a 1.1201-1.1228 band. German Q3 GDP rose 1.7% compared to expectations for a 1.8% q/q increase and Gfk Consumer Confidence Survey was weak. Gfk wrote, “Consumer confidence in Germany deteriorated noticeably in November. Both economic and income expectations along with a propensity to buy have declined, in some cases significantly.”
EURUSD is also suffering from a resurgence of COVID-19 cases and the economic risks associated with tighter restrictions.
Sweden’s Riksbank left rates unchanged and issued a dovish statement reiterating rates will not rise until late 2024. The EURUSD technicals are bearish below 1.1500.
GBPUSD is near the bottom of its 1.3317-1.3352 range, with prices weighed down by broad US dollar strength and diminished risks for a December rate hike.
USDJPY is trading comfortably above 115.00, with prices underpinned by firm US Treasury yields and the risk of even higher US interest rates. USDJPY consolidated gains in a 115.32-115.44 range.
AUDUSD traded sideways and gave up earlier gains in early Toronto trading. NZDUSD has yet to recover from disappointment that the RBNZ only raised rates by 0.25% rather than 0.50%. NZDUSD traded in a 0.6851-0.6892 range overnight
Chart of the Day: US Dollar Index (USDX)
Source: Saxo Bank
FX open, high, low, previous close as of 6:00 am ET
Chart: Saxo Bank
Today’s Bank of China Fix 6.3980 Previous 6.3903
Shanghai Shenzhen CSI 300 fell 0.41% to 4,896.44
China Defense Ministry spokesman said, “ready to crush Taiwan independence at any time.”
Chart: USDCNY 1 month
Source: Yahoo Finance