December 3, 2024
- Fed Officials keep rate cut hopes alive
- JOLTS job openings expected to rise.
- US opens little changed in uneventful session.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.4038, overnight range,1.4010-1.4065, close 1.4048
USDCAD is trading with a bit of a bid due to broad-based US dollar strength and due to fears of Trump’s tariff threats. Sure they may be just a negotiating tactic, but in those negotiations the American’s have the upper hand.
USDCAD remains underpinned by divergent BoC and Fed monetary policy outlooks. In addition Canada’s economy is barely growing while the US is chugging along at around 2.8% y/y.
WTI oil prices are at the top of its 67.90-68.96 range. Prices garnered a bit of support from reports that Opec may announce a delay in production increases until the end of Q1 2025 when they meet on Thursday.
Today’s US JOLTS job openings data are expected to show that job openings increased to 7.48 million from 7.443 million in October.
Fed policymakers Goolsbee, Kugler, and Daley are speaking today
USDCAD Technicals
The intraday technicals remain bullish above 1.3990 and are looking for a break above 4.4100 to extend gains to 1.4170. A move below 1.3980 would extend losses to 1.3960.
Longer term, the monthly chart shows the January 2021 uptrend line intact while prices are above 1.3490, and that level is guarded by support at 1.3660.
For today, USDCAD support is 1.4010 and 1.3980. Resistance is 1.4070 and 1.4110.
Today’s Range: 1.4010-1.4080.
Chart: USDCAD 4 hour
Source: Oanda.com
Hand of Trump
FIFA fans of a certain age vividly remember Diego Maradona’s “Hand of God” goal in the 1986 World Cup that led to England being knocked out of the tournament.
The leaders of Brazil, Russia, India, China, South Africa (BRICS), along with Egypt, Ethiopia, Iran, and the UAE, were just stunned by the “Hand of Trump,” or more accurately, the Mouth of Trump. The BRICS countries, at the urging of Russia’s President Putin, want to create a new currency or payment system to reduce their reliance on the dollar in international trade.
Trump responded with a plan of his own—100% tariffs on imports from all BRICS countries. The result is that the Chinese yuan is now at a 1-year low, and the Brazilian real is under intense pressure.
Fed Officials Planning to Cut Rates
The FOMC is very likely going to cut interest rates to 4.50% on December 18. The odds of such a move are 72%, supported by NY Fed President John Williams, although he avoided naming a date.
Yesterday, he said, “I expect it will be appropriate to continue to move to a more neutral policy setting over time. The path for policy will depend on the data. If we’ve learned anything over the past five years, it’s that the outlook remains highly uncertain.”
Those comments were echoed by Atlanta Fed President Bostic and Governor Christopher Waller.
“You Can’t Always Get What You Want”
The Rolling Stones knew that “You Can’t Always Get What You Want” in 1969. Elon Musk wasn’t even born then, which probably explains why he keeps trying and failing to get what he wants—a $54 billion pay package. That’s the amount of money the Tesla board wants to award Elon, but a Delaware judge said “NO” because the board is beholden to Musk.
EURUSD
EURUSD climbed from 1.0480 to 1.0531, with gains limited by French political turmoil. Prime Minister Michel Barnier is not expected to last beyond Wednesday as he faces a no-confidence vote over his budget. Since no new elections can be called before July 2025, EURUSD will remain on the defensive.
GBPUSD
GBPUSD is in the middle of its 1.2639-1.2698 range, with prices underpinned by EURGBP selling pressure due to French politics. UK BRC Like-for-like Retail Sales fell 3.4% m/m in November compared to a 0.3% gain in October.
USDJPY
USDJPY traded sideways in a 149.50-150.75 range. Price action was contained, with BoJ rate hike expectations and higher US 10-year Treasury yields playing a role.
AUDUSD and NZDUSD
AUDUSD traded in a 0.6455-0.6505 range as it recouped some of Monday’s losses. It is a US dollar story, and the greenback is expected to rise under a Trump administration. French political dysfunction is also providing the greenback with a mild risk aversion bid. Traders are awaiting tomorrow’s Australian GDP and PMI data.
NZDUSD traded in a 0.5865-0.5905 range, mirroring AUDUSD moves for the same reasons.
USDMXN
USDMXN traded sideways in a 20.3509-20.4447 band. Traders have a USDMXN bias to “buy on dips” due to the incoming Trump administration and its fixation on borders and tariffs. Mexico’s unemployment rate is expected to remain unchanged at 2.9% for October.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC Fix: 7.1996 vs exp. 7.2702 (prev. 7.1865)
Shanghai Shenzhen CSI 300 rose 0.11% to 3951.89
USDCNY reached a one-year peak and Chinese bond yields dropped as traders fear China’s economic woes will worsen once Trump takes charge. The latest CN??Y weakness is in response to Trump’s tweet about 100% tariffs on BRIC countries.
Chart: USDCNY and USDCNH
Source: Investing.com
