August 27, 2024
- All Quiet on the Western (and all other) Fronts.
- Equity traders focused on Nvidia earnings
- US dollar adrift in thin trading.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3469, overnight range 1.3465-1.3489, previous close 1.3486
USDCAD is steady but trading with a negative bias due to broad-based US dollar weakness. Substantial short CAD/long US dollar speculative positions are acting as a drag against gains and keeping the focus on the downside. Traders are looking ahead to Friday’s June GDP report, followed by the Labour Day long weekend and the Bank of Canada monetary policy meeting on Wednesday, September 4.
WTI oil prices are sticky in a 76.50-77.47 range even as Middle East tensions ease. The prospect of coordinated central bank rate cuts is raising hopes for a rebound in global growth, which would lead to increased crude demand. Prices also got a bit of a boost on news that Libya will halt production of 1.17 million barrels/day due to an internal political feud.
The Canadian economic calendar is empty, but the US calendar has second-tier data, including Case-Shiller Home Prices and Consumer Confidence.
USDCAD technicals
The intraday USDCAD technicals turned bearish with the break below 1.3810 three weeks ago then embarked on a steep downward slide with the move through support at 1.3660. The downtrend channel is steep and will remain intact while prices are below 1.3560 today and target the downtrend base at 1.3430.
The longer term USDCAD outlook is unchanged. The breach of support at 1.3560 (50% Fibonacci retracement level of 1.3190-1.3945, 2024 range) targets the 61% Fibonacci level at 1.3465, then 1.3330 (78.6% Fibonacci level).
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
Much Ado About Nothing
It’s the last week of the summer—the final few days before worker bees return to the hive in droves, kids head off to school, and the march to the holiday season begins. The Fed is in easing mode, and employment data has usurped inflation numbers as the primary decision-making driver. The employment reports for the rest of this week are overshadowed by next week’s release of ADP, Challenger Job Cuts, and nonfarm payrolls data.
Global Equity Indexes Grind out Small Gains
It’s nothing to write home to mother about, but global equity indexes have drifted higher, and all are posting small gains except for those in China and Australia. Japan’s Topix index rose 0.73%, while Australia’s ASX 200 lost 0.17%. A 0.12% gain in the French CAC 40 index is leading European bourses higher. S&P 500 futures are flat, and gold (XAUUSD) eased to $2508.73.
EURUSD
EURUSD traded in a 1.1159-1.1178 range, with weak German Q2 GDP data helping to limit upside moves. Q2 GDP dipped into contraction territory, falling 0.1%. The results were as expected, so the market reaction was muted. German Consumer Confidence took a turn for the worse, falling 3.4 points to -22.0 from -18.6.
GBPUSD
GBPUSD has a small bid and is trading in a 1.3180-1.3247 range, with gains underpinned by broad-based bearish US dollar sentiment. UK Retail Sales numbers declined for the third month in a row (actual -0.3% vs July 0.2%), but the news didn’t impact the currency.
USDJPY
USDJPY drifted higher, rising from 144.24 in early Asian markets to peak at 145.18 just before NY opened, then slipped to 144.80. There were no new catalysts to drive direction, but ongoing expectations for lower US interest rates and higher Japanese rates are weighing on prices.
AUDUSD and NZDUSD
AUDUSD was directionless in a 0.6762-0.6792 range, with a lack of actionable economic data domestically and from the US keeping traders on the sidelines. NZDUSD traded in a 0.6194-0.6228 range overnight, and it is at the top of that band in NY.
USDMXN
USDMXN rallied yesterday, then traded sideways in a 19.3507-19.4455 range overnight. Mexican political issues have fueled a steady uptrend, which remains intact while prices are above 18.4200.
Bitcoin (BTCUSD)
BTCUSD is trading like a fiat currency, directionless inside a 62,400-64,093 range.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1249 vs exp. 7.1245 (prev. 7.1132)
Shanghai Shenzhen CSI 300 fell 0.57% to 3305.33
PBoC appears to have stopped supporting USDCNY no longer setting the Fix sharply below market expectations. A drop below 7.0900 suggests further losses to 6.8600.
Chart: USDCNY and USDCNH
Source: Investing.com
