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- Powell Speech at 10: am ET
- Fed-speak sounded hawkish
- US dollar consolidates some losses from yesterdaay.
FX at a glance:
Source: IFXA Ltd/RP
USDCAD Snapshot: open 1.2931-35, overnight range 1.2925-57, close 1.2925
USDCAD came under pressure early yesterday following news of China’s latest stimulus program but the drop was reversed following hawkish comments from a slew of Fed officials.
Atlanta Fed President Raphael Bostic said a 50 or 75bp increase is coin toss. Colleague Ester Geroge said there is more room to hike rates while Philadelphia Fed President Patrick Harker said the Fed needs to get to a restrictive stance by year-end
China’s latest stimulus package turned risk sentiment mildly positive and that lifted oil prices and the Canadian dollar.
USDCAD traders are awaiting Powells speech and price action will be rangebound until then.
USDCAD Technical outlook
The intraday USDCAD technicals are bearish below 1.2990, looking for a move below 1.2905 to extend losses to the 1.2840-50 area, which if broken will target 1.2730. A move above 1.2990 targets 1.3080.
For today, USDCAD support is at 1.2870 and 1.2840. Resistance is at 1.2980 and 1.3030. Today’s range: 1.2900-1.3000
Chart: USDCAD 4 hour
Source: Saxo Bank
G-10 FX recap and outlook
Many thousands of years ago, Moses came down from the mount to address the multitudes and read from a stone tablet.
A similar event occurs today at 10: am ET, when Fed Chair Jerome Powell descends from Grand Teton in Jackson Hole Wyoming and delivers a monetary policy outlook for the rest of the year.
Powell’s speech has been highly anticipated, leading a choppy trading week and occurs against a spate of rather hawkish comments from Fed policymakers.
Asia equity indexes closed with gains following Wall Street’s lead but European traders were more cautious. the Major European bourses are flat to negative. S&P 500 futures are down 0.48% while DJIA futures are down 0.35%. WTI oil rose 1.3% from the close and gold fell 0.69%. the US 10 year Treasury yield is steady at 3.075%.
EURUSD traded in a 0.9975-1.0023 range. the single currency is struggling to get upward traction against the backdrop of a looming recession, energy crisis, and the war in Ukraine. Nevertheless, traders were sidelined awaiting Powell’s speech.
GPBUSD traded in a similar fashion to EURUSD. Prices dropped to the session low of 1.1777 in Asia then rebounded to 1.1844 just as NY opened.
USDJPY is consolidating earlier gains in a 136.44-137.12 range, underpinned by firming US Treasury yields.
AUDUSD and NZDUSD are consolidating this week’s gains, underpinned by the improved risk tone following the Chinese stimulus package news on Thursday.
US PCE data is ahead but any reaction may be overshadowed by Powell’s speech.
.FX open, high, low, previous close as of 6:00 am ET
Source: Saxo Bank
China Snapshot
Today’s Bank of China Fix: 6.8486, previous 6.8536
Shanghai Shenzhen CSI 300 fell 0.21% to 4,107.55
From Thursday: China pumped in another CNY 1 trillion ($146 billion) of new programs to stimulate its faltering economy, mostly infrastructure spending. In addition there is support for power companies, property, aid to small businesses, agricultural and funding,
Goldman Sachs economists do not believe the stimulus will be enough to boost GDP above 3.0%.
Chart: USDCNY 1 month
Source: Bloomberg
