June 4, 2024
- 10-year Treasury yield at 4.388%, consolidating Monday’s losses.
- Soft JOLTS data may reignite US dollar selling.
- US dollar consolidating losses-CAD and MXN underperform.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3694, overnight range 1.3621-1.3700, close 1.3626
USDCAD dropped on the heels of the US ISM PMI data yesterday, but the decline was brief. The combination of falling oil prices and the risk that the Bank of Canada cuts rates on Wednesday, lifted USDCAD to 1.3700 today.
The BoC is likely to cut rates due to recent soft domestic data and because Governor Tiff Macklem basically said as much in speeches and comments since April 10. Meanwhile, traders are revisiting their Fed rate cut outlooks and are hoping for a September move, despite Fed comments to the contrary.
WTI oil prices are under pressure despite Opec extending production cuts until the end of 2025. That’s because the cartel is also rolling back some existing productions cuts starting in October. Analysts decided that the news is bearish for WTI as it is occurring when demand for crude may be falling due to sluggish global growth.
USDCAD Technicals
The intraday technicals flipped to bullish with the break of the hourly downtrend line at 1.3650 with a decisive move above 1.3690 targeting 1.3730.
The daily chart shows the downtrend from mid-April intact while prices are below 1.3720 while the January uptrend is in play above 1.3570.
For today, USDCAD support is in the 1.3640 and 1.3610. Resistance is at 1.3710 and 1.3740. Today’s range is 1.3640-1.3740
Chart: USDCAD daily
Source: DailyFX
Greenback Dips after ISM Hits
The US dollar dropped rapidly after Monday’s US ISM PMI data was weaker than expected, at 48.7, compared to the forecast of 49.6 and 49.2 in April. ISM Prices Paid was 57 (forecast 60), but the employment index was 51.3, back above the break-even level. Traders are looking ahead to this morning’s JOLTS for confirmation that the economy is slowing as the labor market becomes better balanced.
“Son of a Glitch”
Warren Buffett became a pauper for the briefest of moments yesterday when the NYSE showed Berkshire Hathaway down 99.97%. Barrick Gold became Barrick Manure after it lost 98.54% of its value before trading was halted, and the techies repaired the problem.
EURUSD
EURUSD rallied to 1.0916 in Asia before retreating to 1.0865 in NY. German unemployment rose 25,000 (forecast 10,000 while the unemployment rate remain unchanged at 5.9%. EURUSD is bullish above 1.0810, looking for a move above 1.0920 to extend gains to 1.0970.
GBPUSD
GBPUSD is trading negatively in a 1.2744-1.2818 range but is off its worst level in NY. The UK election is the primary focus, and it is on July 4. That’s the day Americans celebrate independence from Britain and now will be the day Britain celebrates its independence from Tories.
USDJPY
USDJPY is on the defensive and traded with a bearish bias in a 154.78-156.49 range due to the sharp drop in the US 10-year Treasury yield to 4.39% from 4.45% yesterday. BoJ Deputy Governor Ryozo Himino hinted that the level of the yen may have an impact on interest rate deliberations, and then with a straight face said, “It was inappropriate for central banks to directly target exchange rates in setting monetary policy.”
AUDUSD and NZDUSD
AUDUSD traded poorly and fell to 0.6631 from 0.6699 . Falling commodity prices, particularly iron ore is weighing on the currency.
NZDUSD traded in a 0.6156-0.6198 range, with price action mirroring that of AUDUSD and broad US dollar sentiment.
USDMXN
USDMXN extended its post-election rally, rising from 17.5438 to 18.1930 as investors show their unhappiness with the Socialist Moreno party’s super majority as it controls the Chamber of Deputies and the Senate. The technicals are bullish, and a break above 18.5000 will extend gains to 19.2000.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1083 vs exp. 7.2297 (prev. 7.1086).
Shanghai Shenzhen CSI 300 rose 0.75% to 3615.67
Chart: USDCNY and USDCNH
Source: Investing.com
