April 9, 2024

  • A new record high for Gold-$2,365.31
  • Traders positioned for US CPI to rise on Wednesday.
  • US dollar pares back gains-MXN outperforms again.

FX at a Glance

Source: IFXA/RP

USDCAD Snapshot: open 1.3568, overnight range 1.3560-1.3585, close 1.3574

USDCAD traded narrowly overnight and opened not far from where it closed. Traders are focused on the upcoming BoC monetary policy decision and US inflation data due tomorrow.  They should be worried about the April 16 Federal budget.

The Trudeau’s governments Magic Money volcano erupted earlier and has been spewing billions of your great-grand children’s future for any and all programs in hopes they can buy much need votes. There is $2.4 billion for AI, $73 billion (over 20 years) for defence, $1.5 billion for renters, $1.0 billion to expand day care, $1.0 billion for school food programs, and the list goes on.

The Trudeau government raised the Carbon tax by 23% on April 1, which makes it a 400% increase  since 2019. The government claims that the tax is needed to lower Canada’s carbon emissions. The reality is that  of  the 57 fossil fuel and cement producers linked to 80% of global fossil CO2 emissions since the Paris Agreement, there is not a Canadian name on the list.

USDCAD is likely to spend today’s session inside a 1.3540-1.3630 trading range.

USDCAD Technicals

The intraday USDCAD technicals are bullish above 1.3550 and looking to test the 1.3630 area resistance again. A topside break will extend gains to 1.3660 while a move below 1.3550 targets 1.3510.

 USDCAD is bullish above 1.3480 which also where 100 day(1.3482) and 200 day (1.3500) moving average support is clustered.

For today, USDCAD support is at 1.3550 and 1.3510. Resistance is at 1.3620 and 1.3650. Today’s range is 1.3550-1.3630.

Chart: USDCAD 4 hour

Source: DailyFX

In the Eye of the Inflation Storm

The US dollar rallied last week but has given back some of those gains in somewhat calm trading, ahead of Wednesday’s US inflation storm. The consensus forecast has CPI rising to 3.4% from 3.2% in February, while Core-CPI ticks down to 3.7% from 3.8%.  There is also an undercurrent of negative risk sentiment due to events in the Middle East, Ukraine and from the US reminding China that the Philippines are a treaty ally.

Gold Bugs Buzzing as Prices Soar

Gold enthusiasts are abuzz. The precious metal has risen 19% since Valentine’s Day and reached another all-time high overnight. This move is even more impressive considering the repricing of Fed rate cuts, down from around 150 basis points (bps) at the beginning of the year to just 50 bps today. This has driven the US 10-year Treasury yield up to 4.40%. Perhaps talk of the end of the world isn’t so far-fetched after all.

Stock Analysts Unfazed by Market Jitters

Stock market analysts seem unfazed by current market jitters. Wells Fargo is predicting the S&P 500 will hit 5,535 this year, leading forecasts from Oppenheimer (5,500), UBS (5,400), Goldman Sachs (5,200), and JPMorgan (4,200).

Equities Update

Asian equity markets closed with gains, led by Japan’s Nikkei 225 index rising 1.08% while Australia’s ASX 200 gained 0.45%. European bourses are trading negatively ahead of Thursday’s ECB meeting, except for the UK FTSE 100 index which is up 0.11%. The German Dax is down 0.65% while S&P 500 futures are flat.

EURUSD: EURUSD is inching higher in a 1.0848-1.0879 range.  Price action is muted ahead of tomorrow’s US CPI data and Thursday’s ECB monetary policy meeting.  ECB President Christine Lagarde is expected to acknowledge the slowing economy and falling inflation by pre-announcing a rate cut at the June meeting.

GBPUSD: GBPUSD is grinding higher in a  1.2649-1.2699 band.  The currency caught a bit of a bid after Retail Sales data rose 3.2% y/y in March, easily beating the 1.8% that was expected.

USDJPY: USDJPY rose to 151.95 from 151.74 due to dovish comments by Bank of Japan Governor Kazuo Ueda .  He told the Japanese parliament that  the bank needs low rates because inflation remains above target.

AUDUSD and NZDUSD: AUDUSD rose from 0.6597 to 0.6633, underpinned by general US dollar weakness ahead of the US inflation data. NZDUSD traded higher in a 0.6038-0.6067 range. The RBNZ is expected to leave rates unchanged at tomorrow’s meeting, with analysts anticipating a slightly dovish outlook.

USDMXN: USDMXN dropped steadily, falling from 16.3370 to 16.2608, before rebounding to 16.2947 in New York.  Prices rose modestly after Mexican CPI rose 4.42% in March (forecast 4.5%).

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

Source: Investing.com

China Snapshot

PBoC fix: 7.0956 vs exp. 7.2248 (prev. 7.0947).

Shanghai Shenzhen CSI 300 fell 0.08% to 3533.49.

Chart: USDCNY and USDCNH 4 hour

Source: Investing.com