June 18, 2024
- US Retail Sales rise 0.1% m/m (forecast 0.2%)
- RBA leaves rates and monetary policy unchanged.
- US dollar opens mixed after another uneventful overnight session.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3748, overnight range 1.3710-1.3757, close 1.3723
USDCAD eased from its overnight peak following soft US Retail Sales data which is an indication that economic support from consumers is fading. Even so, it is Canada/US bond spreads that are driving USDCAD direction and they have widened by 18 bps in a month due to expectations for another BoC rate cut (or two) while the Fed sits on its hands.
Source: Worldgovernmentbonds.com
WTI oil are near the top of the 79.17-79.93 overnight range. Prices have got a bit of a boost from chatter about hopes that demand rises from the US summer driving season. However, traders are cautious because of Opec’s plan to increase production starting in October. And by reports that global crude inventories have risen.
USDCAD Technicals
The intraday technicals are bullish above 1.3710 and looking for a break above the1.3760-1.3780, April downtrend line to extend gains to 1.3850, then 1.400. However, the market is very long USDCAD which suggests topside moves will be a struggle.
The 2024 uptrend line is intact above 1.3640 while the 100 day moving average sits at 1.3610. Bollinger band support is at 1.3610 while resistance is at 1.3786.
For today, USDCAD support is in the 1.3720 and 1.3690. Resistance is at 1.3780 and 1.3820. Today’s range is 1.3710-1.3810.
Chart: USDCAD daily
Source: DailyFX
If You Can’t Stand the Heat-Go to Vancouver
Heat warnings have been issued for Ontario, Quebec, the US Midwest and the East Coast. Temperatures (including Humidex levels) are predicted to hit 40C, and it is going to last for a few days. BC may see a surge in tourists as heat wave refugees seek the cooler 20C temperatures in Vancouver.
Let’s Not Go Shopping?
US consumers were not buying as much as anticipated in May. Retail Sales rose 0.1% in May (forecast 0.2%,) and April’s result was revised down from 2.0% to -0.1%. The result knocked the US 10-year Treasury yield down to 4.251% from 4.92% at today’s open.
Source: US Census Bureau
Equity Traders are Smiling
European bourses are in positive territory but off their best levels. The French CAC 40 index is 0.38% after being up 0.53% when NY opened. S&P 500 futures are flitting between gains and losses and are largely flat.
EURUSD
EURUSD traded negatively in a 1.0709-1.0741 band. Price action is being driven by French election news as the decline in the French/German bond spread has stabilized (for now). The ZEW Indicator of Economic Sentiment for Germany hardly changed in June 2024 survey. At 47.5 points, it is 0.4 points above the May value. In contrast, the assessment of the economic situation in Germany has slightly deteriorated. However, the results had little impact on FX trading.
GBPUSD
GBPUSD is choppy in a 1.2669-1.2716 range. Prices are being bounced around by profit taking in EURGP, weighed down by profit-taking in EURGBP and caution ahead of the Bank of England monetary policy meeting, Thursday.
USDJPY
USDJPY rallied from 157.51 Asia to 158.24 then fell to 157.81 after the soft US Retail Sales report which knocked US Treasury yields lower. Bank of Japan Governor Kazuo Ueda said “There’s a chance we could raise interest rates at our next policy meeting, depending on economic, price, and financial data and information available at the time.” The comments were nothing new and a non-factor for traders.
AUDUSD and NZDUSD
AUDUSD rose to 0.6633 from 0.6585 due to somewhat hawkish comments by RBA Governor Michele Bullock admitted that policymakers discussed rate hikes but declined to say if a rate hike was in the cards. She said “Inflation is easing after the but has been doing so more slowly than previously expected and it remains high.”
NZDUSD traded in a 0.6097-0.6140 range and is at 0.6108 early in NY trading. Prices were pressured by AUDNZD demand.
USDMXN
USDMXN is at the bottom of its 18.4324-18.5589 range as the fallout from the election runs its course. Comments by Banxico Governor Victoria Rodrigues about restoring “orderly behaviour” if market volatility became extreme soothed markets and helped put a cap on gains. USDMXN is in an intraday downtrend while prices are below 18.5450 and looking for a move below 18.3500 to target 17.8100.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1148 (prev. 7.1149).
Shanghai Shenzhen CSI 300 rose 0.27% to 3545.59
Chart: USDCNY and USDCNH
Source: Investing.com
