June 28, 2024
- Canada GDP and PCE data-as expected.
- Canadian markets are closed on Monday.
- US dollar opens mixed after choppy overnight session
FX at a Glance
Source: IFXA/RP
USDCAD open 1.3695, overnight range 1.3693-1.3735, close 1.3701
USDCAD rallied in Asia overnight after a disastrous debate performance by a befuddled Biden sparked broad-base US dollar demand, albeit in a poor liquidity trading environment. Prices retreated just as quickly and USDCAD opened little changed from where it close yesterday.
Canadian April GDP rose 0.3% m/m as forecast while the US PCE data came in exactly as expected. The result was a collective yawn by FX traders and the focus will shift to the long week after the option expiry window closes.
USDCAD has some chunky option expiries today. There are reportedly $2.0 billion of strikes in the 1.3675-85 area maturing and $3.05 billion in the 1.3695-05 zone.
WTI oil traded in a 81.84-82.72 range with prices supported by supply concerns and rising middle east tensions.
Canadian markets are closed Monday.
USDCAD Technicals
USDCAD has been boxed inside a 1.3550-1.3850 since April 10 and is in the middle of that range currently.
The intraday technicals are bullish above 1.3650, looking for a break above 1.3730 to extend gains toward 1.3860. A break below 1.3650 targets 1.3610.
The longer term technicals are bullish with the January 2024 uptrend line intact above 1.3610 with a cluster of moving average support also in the area.
For today USDCAD support is at 1.3650 and 1.3620. Resistance is at 1.3720 and 1.3750. Today’s range is 1.3640-1.3740.
Chart: USDCAD daily
Source: DailyFX
“All Hail Donny”
He’s a convicted felon, an almost pathological liar, and likely to be the 47th President of the United States. Even Democrats think so. The Wall Street Journal reports that some Democrat strategists, donors, and advisors were spurred to find a replacement candidate after Biden’s disastrous performance during Thursday night’s debate. CNN said a quick post-debate poll showed 67% of viewers thought Trump had won. The 33% that thought Biden won probably didn’t watch the debate. FX traders did, and the US dollar caught a bid after what the New York Times described as Biden delivering an “excruciating performance.”
Inflation Exits Stage Left
The US Core Personal Consumption Expenditures Price Index did not deliver any fireworks as it rose 0.1% m/m, exactly as predicted and rose 2.6% y/y, also as predicted. Traders ignored the data and are digesting the implications of Biden’s debate performance and the outlook for Nonfarm payrolls data next week.
EURUSD
EURUSD is trading cautiously in a 1.0684-1.0711 range. The single currency is underpinned by hopes that today’s US PCE data will suggest an earlier than expected Fed rate cut. However, the gains are limited ahead of the French election on Sunday. The risk premium on French debt widened to 84.5 points vs. German bunds, the widest since September 2012. As an aside, EU President Ursula von der Leyen was elected for a second term.
GBPUSD
GBPUSD is drifting in a 1.2622-1.2654 range, garnering a bit of support from more robust than expected Q1 economic growth. GDP rose 0.7% q/q (forecast and previous 0.6%) and 0.3% y/y (previous 0.2%). The gains were tempered by news that Business Investment was weaker than expected. US data and the July 4 UK election will determine GBPUSD direction.
USDJPY
USDJPY rallied to 161.28 from 160.51 after Tokyo inflation rose more than expected in June (actual 2.1% y/y vs. May 1.9%), which was offset by rebounding manufacturing activity. Industrial production surged 2.8% m/m in May (forecast 2.0%, April -0.2%). The inflation increase was blamed on higher utility prices. The solid industrial production gains suggest a 0.15% rate hike in July, according to ING analysts. It is likely no coincidence that Japan fired its top FX official Masato Kanda and replaced him with Atsushi Mimura.
AUDUSD and NZDUSD
AUDUSD is at the top of its overnight 0.6619-0.6662 range due to broad US dollar weakness ahead of the US data. NZDUSD followed AUDUSD higher, rising and trading in a 0.6058-0.6095 band.
USDMXN
USDMXN spiked to 18.5994 on the heels of a dovish Banxico monetary policy meeting but has since dropped to 18.2942. The central bank left rates unchanged at 11.00% as expected, but Governor Victoria Rodriguez suggested rate cuts were on the agenda but declined to discuss an August move. Prices were also boosted by the market reaction to the Biden/Trump debate
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC fix: 7.1268 vs exp. 7.2727 (prev. 7.1270).
Sanghai Shenzhen CSI 300 rose 0.22% to 3461.66.
Chart: USDCNY and USDCNH
Source: Investing.com
