March 27, 2024

• US data void sidelines traders.
• Riksbank leaves rates unchanged at 4.0%-Template for ECB?
• US dollar trades narrowly and opens on mixed note.

FX at a Glance

Source: IFXA/RP

USDCAD Snapshot: open 1.3593-97, overnight range 1.3579-1.3608, close 1.3585

USDCAD continues to flirt with the top of its 2024 trading range but the price action is non-committal and underwhelming. Sellers may emerge if Thursday’s January GDP rises 0.4% m/m as expected and reignite a the “economy is rebounding” narrative. That view should be taken with a grain of salt. The Bank of Canada is worried about the countries lagging productivity, so a bounce in monthly GDP, although welcome is hardly a panacea.

USDCAD may have received some support after the American Petroleum Institute reported crude inventories surged by 9.337 million barrels.  The news helped knock WTI down from $82.11 yesterday morning to $80.56/b overnight.  Prices have since climbed to $81.11 in NY.

USD/CAD Technicals

The intraday USDCAD technicals are mildly bullish above 1.3550, looking for a break above 1.3610, then 1.3630 to extend gains to 1.3700.  A break below 1.3550 targets 1.3510 and 1.3480.

The 2024 uptrend line is intact above 1.3460.  A break above the 1.3630-1.3660 zone would shift the focus to 1.3900.

For today, USDCAD support is at 1.3550 and 1.3510. Resistance is at 1.3620 and 1.3650. Today’s range is 1.3540-1.3610.

Chart: USDCAD 4 hour

Source: DailyFX

Sweet Sixteen and Month-End

The NCAA Tournament is down to the final 16 teams, with the UConn Huskies and the Houston Cougars as the two favorites. Traders have turned their attention from their brackets to month-end and quarter-end portfolio rebalancing. The US dollar is expected to see some selling pressure.

Former President Trump is smiling all the way to the bank as his Truth Social investment boosted his net worth to around $7 billion. Now, he just needs the New York Attorney General to accept a check for $545 million.

There isn’t any US data of note, and with a large swathe of the world heading into an extended Easter weekend starting tomorrow, FX trading will be quiet.

EURUSD

EURUSD traded narrowly in a 1.0815-1.0839 band. Prices were pressure following Sweden’s Riksbank  monetary policy decision that left rates unchanged at 4.0%  but warned of a possible rate cut in May or June if inflation stabilizes close to its 2.0% target. The Riksbank decision could be the template for the ECB meeting on April 11. Eurozone sentiment indicators were mixed but show some evidence that the period of Eurozone economic stagnation may be nearing an end.

GBPUSD

GBPUSD is choppy, albeit in a tight 1.2608-1.2636 band. GBPUSD short term technical are providing support for the currency while prices are above the November uptrend line which is at 1.2570.

USDJPY

USDJPY traded defensively in a 151.03-151.97 range following more intervention threats by Finance Minister Shunichi Suzuki. “We are watching market moves with a high sense of urgency. We will take bold measures against excessive moves without ruling out any options.” Unfortunately, it is US and Japan interest rate differentials driving USDJPY gains, and unless Japan hikes or the Fed slashes rates, intervention will only have a short-lived impact.

AUDUSD and NZDUSD

AUDUSD drifted aimlessly in 0.6511-0.6539 range with the February inflation report being largely ignored. Monthly consumer Price Index rose 3.4% y/y (forecast 3.5%, January 3.4%) and do not do anything to change the RBA interest outlook.

NZDUSD traded narrowly but negatively in a 0.5988-0.6011 range.

USDMXN

USDMXN  dropped to 16.6008 following trade and employment data after trading in a 16.6311-16.6840 range overnight. Mexico’s unemployment rate was 2.5% in February compared to the forecast of 2.8% and January’s 2.9% level.  Mexico’s trade deficit narrowed to $0.585b  from  negative $4.315 b in January. Mexico is closed tomorrow for Holy Thursday and also on Friday for Good Friday.

The US and Canadian data calendar is empty.

FX high, low, open (as of 6:00 am ET)

Source: Investing.com

China Snapshot

PBoC fix: 7.0946 vs exp. 7.2250 (prev. 7.0943).

Shanghai Shenzhen CSI 300 fell 1.16%  to 3502.79. 

The recent gains in USDCNY are seen as evidence that Chinese authorities are not unhappy with the weaker CNY, despite making minor protests about the slide by fixing the rate well-below estimates. Analysts at National Australia Bank are suggesting the CNY’s slide has a lot to do with China loss of competitiveness with Japan. In addition, Fed and PBoC interest rate differentials will continue to support USDCNY.

Chart: USDCNY and USDCNH 4 hour

Source: Investing.com