November 1, 2021

  • Hot-air from G-20 and Glasgow Climate Conf. increases risk of global warming
  • China NHS PMI data soft, German Retail Sales weak
  • US dollar consolidates Friday’s gain, opens with a bid

FX at a Glance:


USDCAD Snapshot   Open 1.2379-83, Overnight Range 1.2375-1.2401, Previous close 1.2384

USDCAD rallied from 1.2328 to 1.2405 on Friday, following weaker than expected August GDP (actual 0.4% vs forecast 0.7%) and Statistics Canada’s underwhelming September GDP forecast (unchanged). The overnight action was rather subdued with the currency pair stuck in a narrow 1.2375-1.2401 band. Weaker than expected China NHS PMI data weighed on the commodity currency bloc.

WTI oil prices drifted higher, climbing from $83.23 at Friday’s close to $84.17 in early NY trading, which weighed on USDCAD.

USDCAD direction is dictated by US dollar demand from hawkish FOMC meeting expectations. Goldman Sachs expects the Fed to hike in June 2022, which is in the BoC Governor Macklem’s rate hike window.

Technical view:  The intraday USDCAD technicals are bullish above 1.2320 looking for a break above 1.2430 to extend gains to 1.2500.  A move below 1.2320 would extend losses to 1.2240.  Longer term, the downtrend from the 1.4620 peak in 2020 is intact while prices are below 1.2720 on a weekly chart.

For today, USDCAD support is at 1.2360 and 1.2320.  Resistance is 1.2405 and 1.2430. Today’s range 1.2340-1.2405

Chart USDCAD 4 hour

Source: Saxo Bank

G-10 FX recap and outlook

Investors love the US dollar and Wall Street. The greenback started November with gains across the board led by a 0.96% rally against GBP. S&P500 and DJIA futures closed October at record highs and have added to those gains in early NY trading, as have European bourses. Oil and Gold prices are eking out gains while US 10-year Treasury yields are steady at 1.577%.

The amount of hot air coming from the G-10 and the Glasgow Climate Change Conference is melting polar ice caps as world leaders try to outdo each other making meaningless promises to appease militant progressives in their countries. China is so concerned about Climate Change that President Xi Jinping didn’t show up, perhaps because he is busy planning the reunification-by-tank of Taiwan.

EURUSD traded quietly due to All Saints Day holidays in many Euro area countries including France, and Switzerland. The single currency continues to consolidate losses following last week’s dovish ECB policy meeting outcome and fears that the Fed will adopt a hawkish outlook. Weaker than expected German retail sales data did not help EURUSD sentiment. The intraday technicals are bearish below 1.1640, looking for a break of support at 1.1530.

GBPUSD mirrored EURUSD price action with traders awaiting the outcome of the Fed and Bank of England meetings this week. GBPUSD continues to be supported by the risk the BoE may raise interest rates on Thursday after hawkish comments by the new Chief Economist. The intraday technicals are bearish following the break below 1.3720 on Friday, with a move below 1.3620 targeting 1.3550.

USDJPY extended gains from Friday, rising to 114.44 from 114.02 due to steady to firm US Treasury yields and hawkish expectations for Wednesday’s FOMC meeting. Japan’s ruling LDP party won another but smaller majority in weekend elections.

AUDUSD and NZDUSD lost ground due to broad US dollar demand. AUDUSD traders are cautious ahead of tomorrow’s RBA meeting when the central bank is expected to formally announce the end to the Yield Curve Control policy.

US October ISM Manufacturing PMI is expected to dip to 60.4 from 61.1 in September.

Chart of the Day:  EURUSD hourly

Source:  Saxo Bank

FX open, high, low, previous close

Chart: Saxo Bank

China Snapshot

Today’s Bank of China Fix 6.4192, Previous 6.3907

Shanghai Shenzhen CSI 300 fell 0.37%% to 4,890.68

NHS October Manufacturing PMI 49.2 vs 49.6 in September

MHS Non-manufacturing PMI 52.4 vs 53.2 in September

Caixin Manufacturing PMI 50.6 vs 50 in September

China Commerce Minister Wang Wentao writes letter to New Zealand to officially apply for membership in the Digital Economy Partnership Agreement.

Chart: USDCNY 1 month

Source: Yahoo Finance