December 13, 2024
- Finance Minister Freeland reportedly scrapping $250 cheque plan.
- Busy, busy week ahead, including FOMC, BoE and BoJ
- USD opens little changed from Friday.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.4242, overnight range,1.4217-1.4239, close 1.4236
The Canadian dollar is barely treading water as it enters the full week of FX trading for 2024 and it has not had a good year, having lost nearly 7.0% since January 2. Neither is Prime Minister Justin Trudeau. He has dropped 11 points in the polls since January 5 and is now 23 points behind Pierre Poilievre. The poor man can’t even give away money. Twenty-five days ago Trudeau announced a suite of new measures to bolster his standing in the polls in the guise of alleviating some affordability issues. It didn’t work. He still looks like a muppet and his polling numbers didn’t improved.
Today, the National Post is reporting that Finance Minister Freeland will fail to mention the money-giveaway. That will hardly make the Trudeau faction happy and it isn’t out of the realm of possibility to suggest that when Trudeau provides details of his latest Cabinet shuffle, Mark Carney is named Finance Minister.
The news has nothing to do with the Canadian dollar (unless Carney gets named Finance Minister) and the focus is on the FOMC meeting Wednesday.
Bank of Canada Governor Tiff Macklem is speaking about “Economic Factors Shaping Canada’s monetary policy.” The text is available around 3:30 pm.
However, traders are still long USDCAD leaving the currency vulnerable to year end position adjusting.
Today’s US data includes Building Permits and Housing Starts.
USDCAD Technicals
USDCAD technicals are bullish but they are consolidating last weeks gains in a 1.4200-1.4250 range while trading above 1.4210. A decisive break above 1.4250 targets 1.4300 where a $900 million option strike matures today.
The USDCAD uptrend line from the beginning of October is intact while prices are above 1.4070. that uptrend line should limit Canadian dollar losses in the near term. A break above 1.4250 targets 1.4300.
For today, USDCAD support is 1.4210 and 1.4180. Resistance is 1.4250 and 1.4300
Today’s Range: 1.4210-1.4310.
Chart: USDCAD daily
Source: Oanda.com
PMI’s Barely Move the Needle.
A rash of PMI data from Australia, Germany, and the Eurozone failed to spark much activity in FX markets. The focus is on the upcoming FOMC, Bank of England, and Bank of Japan monetary policy meetings. Of the three, only the Fed is expected to act, lowering its benchmark rate by 25 bps. The other two will stay the course.
EURUSD
EURUSD is spinning its wheels in a 1.0486-1.0524 range and is at the bottom of the band in NY. ECB President Lagarde kept negative pressure on EURUSD today when she said, “If the incoming data continue to confirm our baseline, the direction of travel is clear, and we expect to lower interest rates further.” Another soft German Manufacturing PMI reading (42.5) was offset by a slightly better-than-expected Eurozone PMI reading (45.2 vs. forecast 45). Moody’s downgraded France’s credit rating to Aa2 from Aa3 due to concerns over political fragmentation.
GBPUSD
GBPUSD inched higher in a 1.2611-1.2671 range, garnering a bit of support from an increase in house prices to 1.4% y/y from 1.2%. Gains were capped when December PMI was weaker than expected at 47.3 (forecast 48.1). However, the ECB president’s dovish comments, although nothing new, underpinned prices.
USDJPY
USDJPY traded in a 153.32-153.98 range and sits at 153.78 in NY. Prices are supported by the firm US 10-year Treasury yield, which is 4.38%, and diminished expectations that the Bank of Japan raises interest rates this week.
AUDUSD and NZDUSD
AUDUSD drifted in a 0.6350-0.6383 range. The selling pressure stems from more soft Chinese data pointing to weak Chinese economic growth, which hurts Australian exports. December PMI data was close to unchanged at 50.4. NZDUSD is trading defensively in a 0.5759-0.5786 band due to dovish expectations for the RBNZ and weak Chinese demand.
USDMXN
USDMXN bounced around in a tight 20.1065-20.1531 range due to the slightly softer US dollar profile against the majors and position adjustments ahead of the FOMC meeting.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC Fix: 7.1882 vs exp. 7.2769 (prev. 7.1876)
Shanghai Shenzhen CSI 300 fell 0.54% to 3911.84
China Stimulus Strategy is Just Hot-Air
“Show me the money.” Chinese equities continue to suffer from a lack of details to the multitude of official stimulus promises and plans.
Chinese Retail Sales rose 3.0% y/y in November below the forecast for a 4.6% increase and down from 4.8% in October.
Chart: USDCNY and USDCNH
Source: Investing.com
