August 28, 2024

• The wait for Nvidia earnings is sidelining traders.
• Empty US data calendar suggests another dull trading day,
• US  dollar firms modestly due to profit-taking

FX at a Glance

Source: IFXA/RP

USDCAD open 1.3460, overnight range 1.3441-1.3478, previous close 1.3443

USDCAD is marching to the beat of the US dollar and the beat is “profit-taking,” which is why yesterday’s sell-off stalled.  However, the gains were underwhelming and USDCAD is still on the defensive.

WTI oil prices  traded lower in a 74.20-75.95 range as prices continue to churn in a broad 71.00-78.00 range. Ever-shifting supply and demand concerns are behind the erratic trading. Prices fell even after the American Petroleum Institute reported crude stocks fell by 3.4 million barrels last week.

The lack of top-tier Canadian and US economic data today suggest another uninspiring trading session, with a bearish USDCAD bias.

USDCAD technicals

The intraday USDCAD technicals are bearish with the August 22 downtrend (hourly chart) intact while prices are below 1.3480 and looking for a break of support at 1.3440 to extend losses to 1.3380.

The daily chart shows USDCAD falling sharply towards 1.3380 support which has contained the bottom since February 2024. A decisive breach of this levels suggests a straight shot to 1.3180, the August 2021 low.

For today, USDCAD support is at 1.3430 and 1.3410.  Resistance is at 1.3490 and 1.3520.  Today’s Range 1.3430-1.3510.

Chart: USDCAD 4 hour

Source: DailyFX

Ho-Hum

Traders are uninspired, at least those still at their desks during this last week of summer. A key reason for the malaise is the lack of top-tier, actionable economic data from the U.S. Fed Chair Jerome Powell’s Jackson Hole speech, which essentially confirmed a rate cut on September 18, overshadows most data except the nonfarm employment report due next Friday. That also explains the focus on Nvidia, the AI chip-making stock market darling (a 3100%+ gain since December 2022 will do that). Its quarterly earnings report could either ignite another equity market rally or trigger a crash, depending on the results.

Equities Rising

Japan’s Topix Index rose 0.42%, ahead of Typhoon Shanshan, which prompted Toyota to close all its domestic factories. Australia’s ASX 200 closed unchanged. European bourses are in positive territory, with the German DAX index gaining 0.71%. S&P 500 futures are flat. The U.S. 10-year Treasury yield is 3.817%.

EURUSD

EURUSD gave back all of yesterday’s gains, trading in a 1.1132-1.1186 range, and is at its session low in NY trading. There wasn’t any specific catalyst for the EURUSD sell-off, except for a bit of profit-taking and some chatter that the ECB may need to match Fed rate cuts.

GBPUSD

GBPUSD suffered from a bout of profit-taking, dropping from 1.3264 to 1.3215, and is just above the low in early NY. UK traders are content to sit on the sidelines due to a lack of domestic data.

USDJPY

USDJPY clawed back some of yesterday’s losses, rising from 143.69 to 144.61. Traders were sidelined, awaiting a slew of economic reports tomorrow, including employment, Tokyo CPI, Industrial Production, and Large Retailer Sales. BoJ Deputy Governor Ryozo Himino suggested further rate hikes were likely.

AUDUSD and NZDUSD

AUDUSD closed at 0.6793 then popped to 0.6813 after Australian CPI was higher than expected (actual 3.5% vs. forecast 3.4%). The gains quickly evaporated, and AUDUSD dropped to 0.6782 as the result was still lower than the 3.8% seen in June and because core inflation measures were also falling. NZDUSD traded in a 0.6224-0.6253 range and is close to the top of that band in NY. Traders are looking ahead to New Zealand consumer confidence data on Friday.

USDMXN

USDMXN has a bit of a bid and rose from a low of 19.3507 yesterday to 19.7972 overnight. The greenback caught a bid after Mexico’s outgoing President, Manuel Lopez Obrador, announced a pause with U.S. and Canadian embassies in the country due to criticism of proposed judicial reforms. It is merely theater, as the Mexican government went to great pains to stress that the pause was just with the embassies, not with the USA or Canada.

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

Source: Investing.com

China Snapshot

PBoC fix: 77.1216 vs exp. 7.1210 (prev. 7.1249).

Shanghai Shenzhen CSI 300 fell 0.57% to 3286.50

Yesterday, PDD Holdings (owner of Temu) warned that revenue growth would slow. Chinese stocks came under pressure and continued overnight.  Analysts suggest it is evidence that consumers are struggling, and that the e-commerce sector is weak.

Chart: USDCNY and USDCNH

Source: Investing.com