October 2, 2024
- US ADP Employment change rises more than expected.
- Israel vows to retaliate against Iran, keeping oil prices bid.
- US dollar opens mixed but with bid tone.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3489, overnight range 1.3476-1.3498, previous close 1.3494
USDCAD slipped on oil but remains rangebound inside a 1.3440-1.3550 band. USDCAD rallied on the heels of yesterday’s US data but the gains were erased after WTI spiked on news of Iran’s attack on Israel.
WTI climbed from 67.06 to 70.43 on the back of the JOLTS data then climbed to 72.16 overnight due to speculation that Israel’s retaliation on Iran will include decimating Iran’s oil production capabilities. Those fears overshadowed the Saudi Arabian Oil Minister’s comments warning of 50.00/barrel for crude if the cartel doesn’t stick to its agreed upon production quotas.
There are no Canadian economic reports today.
USDCAD technicals
The intraday USDCAD are bearish inside a 1.3420-1.3540 range supported by the downtrend line from September 19. A break above 1.3540 targets 1.3600.
Longer term, Fibonacci retracement of the January-August 2024 range suggests that a sustained break below 1.3483 targets 1.3336.
Today’s Range 1.3440-1.3540
Chart: USDCAD 4 hour
Source: Oanda.
Bunker Mentality
Iran’s Supreme Leader Ayatollah Ali Khamenei ordered an unprovoked missile bombardment of Israel yesterday. It was a complete and utter failure after the combined might of Israel, the USA, the UK, and other allies intercepted nearly all the projectiles. Khamenei and his sycophants are huddled in a secret bunker, hoping and praying that their bunker works better than Hassan Nasrallah’s did in Lebanon because Israel vowed to retaliate.
ADP before NFP
The monthly ADP employment change data beat expectations and reported that 140,000 new jobs were created in September. That number beat the forecast (120,000) and the previous result (99,000). The ADP data is rarely aligned with NFP but that doesn’t stop traders from hoping “maybe this time is different.” It isn’t. FX markets barely budged on the news.
EURUSD
EURUSD traded negatively in a 1.1054-1.1083 range, weighed down by geopolitical issues, weak Eurozone data, and expectations for further ECB rate cuts. The short-term EURUSD technicals are bearish below 1.100 and looking for a test of support at 1.1000.
GBPUSD
GBPUSD is consolidating yesterday’s losses in a 1.3260-1.3306 range. Tuesday’s US data underpinned Fed Chair Powell’s comments for a slower pace of rate cuts, while Iran’s attack on Israel supported the greenback against the European currencies. The short-term GBPUSD technicals are bearish below 1.3330.
USDJPY
USDJPY traded firmer in a 143.43-144.41 range after safe-haven yen demand faded and US data supported a slower pace of rate cuts. Japan’s Economy Minister Ryosei Akazawa suggested that the BoJ should ensure that managing an exit from deflation is its top priority and to be careful about hiking rates.
AUDUSD and NZDUSD
AUDUSD is recouping yesterday’s losses, having rallied from 0.6875 to 0.6916 before settling at 0.6890 in NY. Prices are benefiting from last week’s Chinese fiscal and monetary stimulus announcements.
NZDUSD is under pressure in a 0.6277-0.6813 range. Prices peaked at 0.6379 on Monday and are in a downtrend while below 0.6310, but the move is merely a correction if the uptrend line from the beginning of August (currently 0.6230) holds. The RBNZ monetary policy meeting is October 8, and a 50 bp rate cut is expected.
USDMXN
USDMXN is on the defensive in a 19.5473-19.6680 range. New President Gloria Sheinbaum was sworn in, and she promised to safeguard foreign investors. The retreat was slowed by higher-than-expected US JOLTS data, which supported Powell’s “no hurry to cut rates” view and by increased risk aversion after Iran’s actions. USDMXN technicals are bearish below 19.6470 on an hourly chart.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: unchanged 7.0074 (prev. 7.0101)
Shanghai Shenzhen CS! 300 closed at 4017.85 (as of September 30)
Chinese markets closed for Golden Week.
Chart: USDCNY and USDCNH
Source: Investing.com
