September 23, 2024
- China cuts its 14-day rate to 1.85% from 1.95%.
- Disappointing PMI data from UK and Eurozone weigh on GBP and EUR.
- US dollar opens on mixed note.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3562, overnight range 1.3549-1.3583, previous close 1.3576
USDCAD drifted aimlessly overnight but with a bearish bias due to improved risk sentiment on hopes for additional stimulus in China. Traders are now focused on Tuesday’s remarks from Bank of Canada Governor Tiff Macklem, who is scheduled to speak to the Canadian Bankers Association. The text of his speech will be released at 12:55 pm EDT, potentially offering clues about the size of the next rate cut. July GDP data will follow on Friday.
WTI oil prices traded in a 70.73-71.67 range. Oil is underpinned by increased fears of supply disruptions if the Israel/ Iran-Hezbollah skirmished blossom into all out war.
USDCAD technicals
The intraday USDCAD technicals have a slight negative bias in a 1.3530-1.3590 range, while prices are below 1.3580 and are looking for a break of support at 1.3530 to extend losses to 1.3460.
The daily chart shows an uptrend channel from the beginning of September intact while prices are between 1.3540 and 1.3670. A break below 1.3540 targets 1.3460.
For today, USDCAD support is at 1.3530 and 1.3510. Resistance is at 1.3590 and 1.3620.
Today’s Range 1.3510-1.3590
Chart: USDCAD daily
Source: Investing.com
“Giddy-up”
A camel-version of the Pony Express mail service may be implemented in Iran after the Revolutionary Guards Corps (IRGC) ordered all its members to stop using any type of communication device. Can you say “Giddy-up?”
Equities in Positive Territory.
Asian equity markets closed on a soft note. Australia’s ASX 200 fell 0.69% and Hong Kong’s Hang Seng index finished flat. European bourses are mixed. The German Dax is up 0.52%, the French CAC 40 index is down 0.30% and the UK FTSE 100 is unchanged. S&P 500 futures are up 0.20% and the US 10-year Treasury yield is steady at 3.75%.
EURUSD
EURUSD plunged to 1.1083 from 1.1168 after Eurozone PMI data fell more than expected after September PMI data was weaker than expected. The data paints a picture of a deepening downturn in the manufacturing sector and Composite PMI fell to 48.9 from 51.0 in August. The data raises the odds for an ECB rate cut in October to nearly 80% from 68% previously.
GBPUSD
GBPUSD traded sideways in Asia then dropped from 1.3323 to 1.3249 in Europe after PMI data was weaker than expected. S&P Global Market Economist Chris Williamson said, “A slight cooling of output growth across manufacturing and services in September should not be seen as too concerning, as the survey data are still consistent with the economy growing at a rate approaching 0.3% in the third quarter.” Those soothing words helped boost GBPUSD to 1.3296 in early NY trading.
USDJPY
USDJPY rallied then sank in a 143.34-144.45 range in moves that were exaggerated due to Japanese markets being closed.
AUDUSD and NZDUSD
AUDUSD traded higher in a 0.6793-0.6837 range supported by improved risk sentiment in Asia, after the PBoC trimmed its two-week repo rate. Support also stems from expectations for unchanged rates at tomorrow’s RBA meeting. Australian PMI data was uninspiring. S&P Global economists wrote, “September, business activity growth remained sluggish following a strong start to 2024. Market-sector employment continued to expand, but only slightly, while inflationary pressures eased.”
NZDUSD traded higher in a 0.6225-0.6253 range with prices underpinned by improved risk sentiment and the rate cut in China.
USDMXN
USDMXN traded firmer in a 19.3628-19.5031 range. Retail Sales rose 0.7% m/m in July compared to a drop of 0.5% in June and USDMXN dropped to 19.3494 on the news. Traders are cautious ahead of Tuesday’s inflation data and the Banxico meeting on Thursday may limit price action.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.0531 vs exp. 7.0518 (prev. 7.0644)
Shanghai Shenzhen CS! 300 rose 0.37% to 3212.76
China lowers 14-day reverse repo rate to 1.85% from 1.95% which served to lift equities. PBoC Governor Pan Gongsheng will provide an economic update tomorrow, leading to speculation that authorities will announce another stimulus plan soon.
Chart: USDCNY and USDCNH
Source: Investing.com
