November 5, 2024
- Markets adrift as America votes
- RBA leaves rates unchanged as expected
- US dollar drifts lower in quiet trading.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3885, overnight range 1.3875-1.3907 close 1.3902
USDCAD traded narrowly. Traders are nervous as a Trump victory is likely to send USDCAD to 1.4100 or higher due to the risk of new and higher tariffs. Trump is also known to dislike Justin Trudeau.
But that is not all. To quote Alberta Premier Danielle Smith, Justin Trudeau has a deranged vendetta against Alberta. She has a point. Convicted felon and Environment Minister Steven Guilbeault has decided that the oil and gas sector must do more to help Canada get to net zero carbon emissions and announced plans to lower the energy sector emissions cap by 33% below the 2019 level by 2030.
He conveniently ignores the fact that if Canada eliminated every drop of greenhouse gas emissions nationwide, it would have absolutely zero impact or effect in lowering the world’s GHG emissions. None at all.
Canada’s September trade deficit narrowed but the August result was revised higher.
The BoE Summary of Deliberations from the October 23 meeting are due. The US releases ISM Services PMI.
USDCAD Technicals
The intraday USDCAD technicals unchanged and still useless until after the election-and the FOMC decision.
Just for fun, A Trump victory suggests further gains above 1.4000 to initially, 1.4100. A Harris win suggests further losses to the 1.3750 area.
The USDCAD uptrend line from June 2021 is intact above 1.3405 on a monthly chart.
For today, USDCAD support is 1.3860 and 1.3930. Resistance is 1.3930 and 1.3960.
Today’s Range 1.3860-1.3960.
Chart: USDCAD weekly
The Whole World is Watching
Americans go to the polls today, and global financial markets go to pubs. Price action is just noise with markets awaiting the results. Will it be another four years of bluster, bafflegab, and invented facts, or four years of… well, who knows. With Donald Trump, voters know what they’re getting. Kamala Harris remains a virtual unknown to many Americans, including some Democrats. There may not be enough alcohol in the world to handle what’s coming, especially if Trump finishes second. And then, there’s the FOMC to worry about.
Iran Targeting Israel Again
Iran’s Supreme Leader, Ali Khamenei, is reportedly preparing another attack on Israel, this time with “more powerful” weapons. That threat is underpinning crude prices, as WTI traded in a 71.31-72.03 range overnight. The real risk lies not in Iran’s attack but in Israel’s potentially devastating retaliation, as Iran’s technology and weapons are vastly inferior to the Israeli arsenal.
EURUSD
EURUSD drifted sideways in a 1.0872-1.0901 range due to a lack of interest ahead of the US election. Trading will get really interesting if EURUSD is near 1.0900 around 10:00 AM ET (7:00 am PT) when 1.7 billion option strikes roll off. There are another 2 billion of 1.0850 strikes. There were no actionable economic releases to drive activity.
GBPUSD
GBPUSD recovered all of yesterday’s losses, trading in a 1.2948-1.2987 range. Traders are sidelined by the US election and the upcoming Bank of England meeting. On Thursday, the BoE is expected to cut rates by 25 bps.
USDJPY
USDJPY traded in a 152.05-152.55 range, supported by the US 10-year Treasury yield, which is sitting at 4.30%. Traders are on the sidelines ahead of the US election and Thursday’s FOMC meeting.
AUDUSD and NZDUSD
AUDUSD is at the top of its 0.6579-0.6623 range, fueled by the RBA’s decision to leave rates unchanged at 4.35% (as expected). The statement noted that “it will be some time yet before inflation is sustainably in the target range and approaching mid-point,” suggesting rates may remain unchanged well into 2025. NZDUSD climbed from 0.5967 to 0.6004 due to general US dollar weakness and better-than-expected services data from China.
USDMXN
USDMXN is trading nervously in a 20.0949-20.1878 range, driven by US election jitters. A Trump victory could drive USDMXN higher due to his fondness for tariffs.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1016 (prev. 7.1203)
Shanghai Shenzhen CSI 300 rose 2.53% to 4044.57
Caixin Services PMI rises to 52 from 50.3 in October. Stocks rallied on this “good news” report The Senior Economist at Caixin Insight Group wrote: “Supply and demand continued to grow as the market improved. Overseas demand grew for the 14th straight month, with surveyed companies citing improved external conditions. Market optimism improved. The gauge for future activity expectations rebounded by nearly 3 points to reach a five-month high.”
Chart: USDCNY and USDCNH
Source: Investing.com
