– Plenty of actionable data this week, but not today.
– US/China trade tensions reignite.
– US dollar trading with a mixed bias to start the week.
USDCAD: open 1.3516-20, overnight range 1.3496-1.3529, close 1.3515, WTI $76.33, Gold, $2031.84
The Canadian dollar and the proverbial headless chicken have similar characteristics. Both are running around without any discernible direction. That’s good news for corporate treasurers as a stable currency makes managing cash flow easier. It’s a different story for traders where erratic but rangebound markets make it difficult to follow a trend.
Global risk sentiment is mildly positive after Wall Street closed near record highs thanks to blow-out earnings from AI barometer, Nvidia. The tech stock surged to become the third most valued company by market cap on Friday after it predicted its Q1 2024 earnings would rise by 233%.
However, there is a boogeyman under the bed. Katherine Tai, the US Trade Representative, released the annual report on China’s WTO compliance. To say it wasn’t flattering is an understatement. China’s trade practices are serious issues for the Biden administration.
China’s Ministry of Commerce responded by saying “The US uses smear tactics and blame-shifting methods to cover up its violations and sabotage.”
Asian equity markets closed higher except for Hong Kong’s Hang Seng and European bourses are flat to negative. S&P 500 futures are down 0.10%.
EURUSD is at the top of its 1.0812-1.0853 range with traders awaiting the US PCE inflation report on Thursday and Eurozone inflation data on Friday. The short-term EURUSD technicals are bullish above 1.0810 looking for a test of uptrend-channel resistance at 1.0890.
GBPUSD followed EURUSD higher, and it is also at the top of its 1.2656-1.2697 range. Bank of England Chief Economist Hu Pill speaks later today. He is unlikely to contradict his previous remarks when he said the first rate cut is months away.
USDJPY was steady in a 150.29-150.68 range, partly because the US 10-year Treasury yield remained steady at 4.25%.
AUDUSD enjoyed the minor US dollar retreat against the majors and traded firmer in a 0.6542-06568 range. Upside momentum slowed on fears that US and China tensions have resurfaced.
The US economic calendar has January New Home Sales