November 21, 2024
- Wisps of risk aversion ripple through markets.
- US jobless claims fall 6,000, Philly Fed falls
- US dollar opens mixed after uneventful overnight session.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3969, overnight range,1.3958-1.3979, close 1.3976
USDCAD traded sideways overnight with direction determined by broad US dollar moves. The narrowing of CAD/US interest rate differentials contributed to the USDCAD slid from 1.4100 on Tuesday.
Canadian’s are feeling blessed after Prime Minister Trudeau told the audience at the G20 summit how we are proud to put saving the environment above the more basic needs of food and shelter. Take a bow. Then he went to the magic money tree in his office and leaked plans to spend multi—billions on affordability programs, including GST relief because apparently homeless, hungry Canadians get angry and take their wrath out on the ruling party, and he is already bottom-feeding in polls.
None of that matters. Its geopolitics and Fed rates that are driving the currency.
USDCAD Technicals
The hourly technicals are bearish while prices are below 1.3980 and are looking for a break below the 1.3940-50 area to extend losses to 1.3910.
Longer term, the USDCAD uptrend from September 26 (daily chart) is intact while prices are above 1.3930 and that level is guarded by the November uptrend line at 1.3980. The previous double top at 1.3960 is additional uptrend support.
For today, USDCAD support is 1.3940 and 1.3910. Resistance is 1.3970 and 1.4020
Today’s Range 1.3940-1.4020.
Chart: USDCAD daily
Source: Oanda.com
“Bring it on”
Russian President Putin threatened the use of nuclear weapons after US President Joe Biden gave Ukraine permission to use American-made weapons to strike inside Russia. That was a few days ago, but a recent Sotheby’s auction in New York suggests Putin’s target should be the ‘crypto-visionary’ who spent $6.2 billion on a banana duct-taped to a wall—a grotesque homage to conspicuous consumption, influencer culture, and the desperate scream of ‘Look at me, I’m special!’ as mushroom clouds loom on the horizon.”
Philadelphia Fed Manufacturing Survey and Weekly Jobless Fall
Today’s US data solved nothing. Weekly jobless claims fell to 21,000 from an upwardly revised 219,000 last week. That’s a good number which suggests the employment market is resilient. However, the Philly Fed Manufacturing Survey fell 15.8 points to -5.5 from 10.3 in October. The data gave equity futures a lift but Treasury yields barely budged. FX traders largely ignored the news.
Turkey’s are in Focus (not politicians)
American traders are shifting their attention from economic data, doomsday nuclear scenarios, and the Middle East to travel, turkey, and the kick-off of the holiday season. It helps that today’s US economic data is the usual Thursday mix that will be largely forgotten long before the next FOMC meeting, which is about a month away. Remarks by Fed Governors Bowman and Cook did not add any clarity to the interest rate debate. Michelle Bowman argued for a cautious approach to monetary policy while Lisa Cook sounded more dovish. She said “Going forward, I still see the direction of the appropriate policy rate path to be downward.”
Equity Indexes Trading Negatively
Ukraine claims a Russian ICBM landed in Dnipro which, because of the missile’s nuclear warhead capabilities, spooked global investors, as did the drop in NVIDIA shares in after-hours trading. Japan’s Topix index lost 0.57% while Australia’s ASX 200 closed nearly unchanged. European bourses are in the red, led by a 0.50% drop in the French CAC 40, but the UK FTSE 100 managed to squeeze out a small gain. S&P 500 futures are down 0.11%. The US dollar index opened exactly where it did yesterday, while gold (XAUUSD) inched higher. The US 10-year Treasury yield is steady at 4.40%.
EURUSD
EURUSD bopped and weaved in a 1.0514-1.0555 range overnight with topside gains limited by escalating Russia/Ukraine hostilities. The risk of a new US tariff regime on the European economic outlook is also weighing on the single currency. The intraday EURUSD technicals are bearish and looking for a test of support at 1.0450.
GBPUSD
GBPUSD drifted in a 1.2623-1.2660 range with support stemming from some analysts believing the Bank of England will not cut rates as deeply as expected before the UK budget was released. GBPUSD gains were capped by minor risk aversion and caution due to Trump’s tariff plans.
USDJPY
USDJPY dipped from 155.44 to 154.09 after BoJ Governor Kazuo Ueda indicated that rates could rise at the December 19 monetary policy meeting. He said, “There’s still a month to go” until the BOJ’s next meeting in December. “A vast amount of data and information will become available between now and then.”
AUDUSD and NZDUSD
AUDUSD rose from 0.6502 to 0.6525 in an uninspiring session with price action dictated by prevailing US dollar sentiment. The AUDUSD technicals are bearish below 0.6600. NZDUSD traded in a 0.5860-0.5886 range with gains hampered by geopolitical tensions.
USDMXN
USDMXN traded with a bit of a bid in a 20.2619-20.3715 range due to yesterday’s dovish comments from Banxico Governor Victoria Rodriguez suggesting rates could fall further and news that the government scrapped five independent regulatory bodies. In addition, the Trump tariff plan is also underpinning prices.
BTCUSD (Bitcoin)
BTCUSD is eying the $100,000 level after trading in a 93,074-97,959 range. Investors are pumped about Trump’s plans to adopt a crypto-friendly regulatory regime.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1934 vs exp. 7.2482 (prev. 7.1935)
Shanghai Shenzhen CSI 300 rose 0.09% to 3989.30
Chart: USDCNY and USDCNH
Source: Investing.com
