September 10, 2024
- Chinese exports soar which raises risks of more G-10 tariffs.
- Presidential debate and wait for CPI sideline traders.
- US dollar opens narrowly mixed.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3569, overnight range 1.3556-1.3579, previous close 1.3558
USDCAD traded sideways overnight. Traders did not get excited about the surge in Chinese exports or even the better than expected UK employment data. Instead they twiddled their thumbs while awaiting tonight’s US presidential debate and tomorrows US inflation data. CPI has diminished importance as the Fed’s focus is on the job market. However, a sharply higher inflation reading would rattle analysts as it could slow the pace of rate cuts.
Tiff Macklem, dropped in on the Canada-UK Chamber of Commerce today to talk about Global trade and its implications for Canada. In a nutshell, he said “The implications for Canadian monetary policy are clear: slower globalization and ongoing trade disruptions could lead to higher inflation pressures and greater volatility.”
WTI oil prices traded choppily in a 67.55-69.08 range then settled at 68.00 in NY. Prices retreated from the peak on the back of weak Chinese import data but prices were underpinned by concerns about a hurricane making landfall in Louisiana and disrupting crude production.
There are no US or Canadian economic reports today.
USDCAD technicals
The intraday USDCAD technicals are mildly bullish while trading above 1.3500 and looking for a break above 1.3590 to extend gains to 1.3680, then 1.3800. A break below 1.3490 targets 1.3450.
Long term, the uptrend line from June 2021 (monthly chart) is intact while prices are above 1.3420.
For today, USDCAD support is at 1.3530 and 1.3500. Resistance is at 1.3590 and 1.3620.
Today’s Range 1.3520-1.3590
Chart: USDCAD 4 hour
Source: Centralcharts.com
Family Feud
When America invades a smaller Middle Eastern country or a Caribbean island, the country is usually united under a wave of patriotic fervor. An election is a different kettle of fish. Unity gives way to animosity as the two dominant political parties fight tooth and nail to win the White House. Tonight’s presidential debate between Vice President Kamala Harris and Donald Trump will be entertaining, mostly because of “the Donald’s” penchant for never letting facts get in the way of an argument. It’s tax-and-spend vs. tax-slash and tariffs.
Taking a Bite out of Apple
The European Union is looking to American technology companies to solve some of their budgetary problems. The EU Court of Justice agreed that Apple must pay €13.0 billion in back taxes because Ireland broke state-aid law by giving Apple an unfair advantage. And then, to further rub American noses in it, the EU also fined Google €2.4 billion for abusing its market power. It’s not a stretch to expect the US Department of Justice to set its sights on EU-based banks and corporations.
EURUSD
EURUSD is uneventful in a 1.1028-1.1050 range. German inflation data was as expected, but traders are focused on Thursday’s ECB meeting. A 25 bp rate cut is fully priced, leaving ECB forward guidance to drive direction.
GBPUSD
GBPUSD traded positively in a 1.3058-1.3108 range following a stronger-than-expected unemployment report. UK unemployment rose to 4.1% compared to 4.2% previously, while job gains were 265,000 compared to 115,000 previously.
USDJPY
USDJPY dipsy-doodled in a 142.86-143.71 range, with prices supported by suggestions that the Bank of Japan will leave rates unchanged at next week’s meeting.
AUDUSD and NZDUSD
AUDUSD traded sideways in a 0.6644-0.6673 range. News that the Westpac Consumer Sentiment Index fell to 84.6 from 85.0 had little impact, but it was further evidence that the domestic economy is weak. NZDUSD is trading at the top of its 0.6132-0.6162 range, supported by a 0.6% surge in Manufacturing Sales in Q2 (previously -0.3%).
USDMXN
USDMXN is recouping yesterday’s losses and is trading firmer in a 19.8751-19.9665 range. The gains are due to yesterday’s lower-than-expected inflation result, which increased the risk of another Banxico rate cut. In addition, traders are fretting about the Judicial Reform Bill, which is currently being debated in the Senate.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1136 vs exp. 7.1140 (prev. 7.0989).
Shanghai Shenzhen CSI 300 rose 0.09% to 3195.76
China trade surplus rises to $91.02 billion (forecast $83.9, July $84.65), thanks to a 8.7% jump in exports (forecast 6.5%) while imports rose just 0.5% (forecast 2.0%, previously 7.2%). The news is bad for China and worse for their trade partners as it is evidence of Beijing’s plan to keep its economy afloat by flooding G-10 markets with cheap goods.
Chart: USDCNY and USDCNH
Source: Investing.com
