US Inflation Climbs

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April 13,2021

US CPI higher than forecast

Eurozone ZEW Sentiment soft

Bitcoin posts new record high of $63,191.37

USDCAD open 1.2586-90, Overnight Range 1.2561-1.2624, close 1.2561

FX at a Glance

Source: IFXA/RP

FX Recap and Outlook

March CPI rose 0.6% compared to a 0.4% increase in February. The Bureau of Labor Statistics said it is the largest one-month increase since March 2012. The data was highly anticipated but market reaction to the results did not live up to the billing.

10-year Treasury yields were a tick lower, falling to 1.669% and gold prices bounced from $1728.00 to $1737.00. The US dollar gave back pre-data gains and S&P 500 futures jumped to $4128.00 from $4111.00

Yesterday St Louis Fed President James Bullard said, “it was too early to talk about changing monetary policy.” Then he went on to talk about it, saying, “When you start to get to 75% vaccinated, 80% vaccinated and CDC starts to give more hopeful messages that we are bringing this under better control and starts relaxing some of their guidelines, then I think the whole economy will gain confidence from that,” This morning’s CPI release suggests that Mr Bullard is correct-It’s too early to talk rate hikes.

Bitcoin (BTCUSD) posted a new record high of $63,209.45 before easing to $62,922.58, which suggests that the current “record high” will be short lived, since the inflation data didn’t due anything to change the landscape. Prices are bid do the pending Coinbase listing on the Nasdaq.

Geopolitical tensions continue to swirl. China accused the US of “playing with fire” after the Americans issued new Taiwan guidelines. Russia’s Foreign Minister said that the US support for the Ukraine is a serious challenge to Russian sovereignty. FX traders yawned at the news.

EURUSD danced around the 200 day moving average overnight, but scratched out further gains post-CPI, rising from 1.1892 to 1.1930. Eurozone ZEW economic sentiment for Germany and the Eurozone was weaker than expected but ignored because it was COVID-19 related. EURUSD is attempting to break above resistance in the 11830-60 area.

GBPUSD is trading at the bottom of its overnight range , in part because of EURGBP demand. UK data was mixed to strong thanks to better than expected BRC Retail Sales, and slightly worse than expected February GDP data (actual 0.4% vs forecast 0.6% m/m)

USDJPY is trading at the bottom of its 109.14-109.74 range, with the low occurring post-CPI.

NZDUSD is outperforming AUDUSD in NY trading, but both currency pairs remain rangebound. Australia Business Confidence data didn’t have a lasting impact and NZDUSD traders await tomorrow’s RBNZ monetary policy meeting.

USDCAD is see-sawing inside a 1.2550-1.2630 range and awaiting a fresh catalyst to provide direction. Sentiment is modestly negative in anticipation of a QE tapering announcement at the Bank of Canada April 19 meeting. The BoC Business Outlook Survey showed firm were optimistic about future sales.

USDCAD Technicals

The USDCAD technicals are neutral while prices are in the 1.2500-1.2650 range. The January downtrend is intact below 1.2630. For today, USDCAD support is at 1.1.2550 and 1.2510. Resistance is at 1.2630 and 1.2630. Today’s Range 1.2530-1.2630

Chart: USDCAD hourly