March 14, 2024
- US data may not be enough to jump start markets.
- WTI oil pops above $80.00/barrel.
- US dollar opens slightly lower
FX at a Glance
Source: IFXA/RP
USDCAD Snapshot: open 1.3464-68, overnight range 1.3463-1.3483, close 1.3472
USDCAD drifted lower along with the other G-10 majors in another uneventful overnight session. USDCAD direction continues to be determined by general market risk sentiment as there is not a domestic story compelling enough to drive the Loonie in any direction. USDCAD downside is supported by widening CAD/US interest rate spreads which favor the US dollar.
WTI oil prices popped above $80.00/b and traded in a $79.58-$80.59/b range overnight, supported by yesterday’s EIA report. US crude inventories fell by 1.53 million barrels last week compared to expectations for a 1.33 million build. Prices are also underpinned by the latest forecast by the International Energy Agency (IEA) that world oil demand will rise 1.3 million barrels/day, a 110,000 barrel increase from its previous estimate. Stronger US demand and higher demand for ocean ship fuel are behind the increase.
Canada Manufacturing Sales were weaker than expected (actual 0.2% vs forecast 0.4% m/m) but the results were ignored.
USDCAD Technicals
The USDCAD intraday technicals ( hourly chart)l are mildly bearish while trading below 1.3505 (4 hour chart) and looking for a break below 1.3460 to extend losses for a test of the 2024 uptrend line at 1.3420.
A sustained move below the 200 day moving average at 1.3475 suggests further losses to 1.3420, while the 100 day moving average at 1.3520 may limit gains.
For today, USDCAD support is at 1.3460 and 1.3410. Resistance is at 1.3505 and 1.3530. Today’s range is 1.3440-1.3520.
Chart: USDCAD 4 hour
Source: Daily FX
G-10 FX
It’s the middle of March when a young traders’ fancy turns to Spring Break. The evidence is indisputable. How else can moribund FX markets be explained?
Analysts are speculating that the upcoming “non-event” FOMC meeting may not be that “non.” That’s because of speculation that the new Summary of Projections will reveal members only expect two rate cuts in 2024. Today’s US data may reignite the debate if it suggests prices are falling and employment pressures are easing. US PPI data (forecast 1.1% y/y vs. January 0.9%, Core-PPI forecast 1.9% y/y vs. 2.0%), Retail Sales forecast (0.8% vs. -0.8% in January), and initial Jobless claims (forecast 218,000) are on tap.
EURUSD traded narrowly in a 1.0932-1.0955 range. Prices were weighed down by dovish comments by ECB Governing Council Member Yannis Stournaras. He said, “We need to start cutting rates soon so that our monetary policy does not become too restrictive. It is appropriate to do two rate cuts before the summer break, and four moves throughout the year seem reasonable. Insofar, I concur with the markets’ expectations.”
GBPUSD is a tad firmer, trading in a 1.2787-1.2823 range. Prices may be getting a bit of support from a report by Pantheon Macroeconomics that says UK Q1 growth will be 0.3% q/q as the UK recovery from recession gains steam.
USDJPY shuffled in a 147.53-147.96 range with prices underpinned by elevated Treasury yields. The US 10-year Treasury yield climbed to 4.204% today, from 4.131% yesterday.
AUDUSD traded quietly in a 0.6610-32 band with traders content to await US Retail Sales and PPI data.
USDMXN traded in a 16.6604-16.7105 range with prices tracking broad US dollar sentiment. Expectations that Banxico would cut rates at next Thursday’s monetary policy meeting rose further, yesterday after Deputy Governor Omar Mejia’s comments. He said, “We must be careful not to adopt an excessively restrictive monetary stance, which is why I believe it is pertinent to also make adjustments in this sense.”
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.0974 vs (prev. 7.0930}.
Shanghai Shenzhen CSI 300 fell 0.028% to 3562.22.
Chart: USDCNY and USDCNH daily
China is unhappy that the US House voted to ban Tik Tok due to the belief the App is a Chinese spy tool.
Source: Investing.com
