February 12, 2024
- FX action missing with Asian markets closed.
- US CPI due Tuesday.
- US dollar opens mixed after quiet overnight session.
FX at a glance
USDCAD Snapshot: open 1.3460-66, overnight range 1.3450-1.3470, close 1.3457.
USDCAD is directionless but seemingly a tad offered after Friday’s employment data has many analysts and economists arguing that recent economic data underscores a somewhat resilient economy which justifies the Bank of Canada’s hawkish tone. That message contradicts the BoC’s own words that :Governing Council’s discussion about future policy is shifting from whether monetary policy is restrictive enough to how long to maintain the current restrictive stance.”
Tomorrows US CPI data will determine if USDCAD can break below 1.3410 or continue to range trade in a 1.3410-1.3550 band.
WTI traded in a $75.89-$76.62 range and is near the bottom in early NY trading. The oil price dynamic remain unchanged. Elevated US production has offset Opec production cuts.
The USDCAD intraday technicals are neutral inside a 1.3410-1.3500 range which is likely to remain intact today. The hourly technicals are bullish above 1.3440, looking for a break of 1.3400 to extend gains to 1.3550. A break below 1.3440 targets 1.3410, which if broken will extend losses to 1.3430.
Longer term, the weekly uptrend is intact above 1.3380.
For today, USDCAD support is at 1.3440 and 1.3410. Resistance is at 1.3500 and 1.3530. Today’s range is 1.3430-1.3490
Chart: USDCAD daily
Source: Daily FX
G-10 FX recap
Asian markets were closed for various versions of Lunar New Year festivities; Japan celebrated National Founding Day, and Australians are enjoying the Hobart Bank holiday. A large swath of Germany is closed for the Monday Before Lent holiday. South American and Caribbean markets are shuttered for Carnival Monday.
Canada and the US are not officially closed as Super Bowl Hangover Day is not a recognized holiday. An estimated 114 million viewers in the US and 8.8 million in Canada needed copious quantities of alcohol to shake off their despondency from Usher’s half-time show and will be feeling the effects today.
With no significant US data releases scheduled for today and US inflation figures expected on Tuesday, trading activity is likely to be subdued.
EURUSD started strong but quickly faded and fell from a peak of 1.0806 to 1.0763 band. A flock of ECB officials suggesting interest rates need to be cut weighed on the currency pair.
GBPUSD is trading near the bottom of its 1.2608-1.2655 range and an economic analysis from Goldman Sachs isn’t helping sentiment. Goldman released a report that claims Brexit is responsible for the UK’s economic underperformance compared to other advanced economies.
USDJPY fell from its session of 149.30 to 148.93 in very thin holiday markets although the firm US 10 year Treasury yield (4.15%) limited losses.
Australia was closed which helped keep AUDUSD contained in 0.6512-0.6532 range. Across the Tasman Sea, NZDUSD markets were open, and the currency pair drifted in a 0.6121-0.6152 range. RBNZ Governor repeated a need for restrictive monetary policy but his words had little impact.
USDMXN traded in a 17.0545-17.1178 range with market activity subdued by widespread holidays around the world. Mexico CPI was mixed. Headline CPI inched higher to 4.88% y/y (previous 4.85%) while core CPI dipped to 4.76% from 5.09%. Analysts suggest that a slow pace of inflation declines will also slow the pace of rate cuts.
FX high, low, open (as of 6:00 am ET)
PBoC fix: today 7.1036, expected 7.1996, previous 7.1063
Shanghai Shenzhen CSI 300 closed- Feb. 8/24- 3364.93.
Chinese markets will be all week for Lunar New Year
Chart: USDCNH daily
Source: Daily FX