| |
|
Citizens Foreign Exchange: Your Foreign FiX for Thursday, March 28 |
| |
  |
| |
| Trading Desk Direct: 888.821.3600 |
| |
|
| |
Your Foreign FiX
Thursday, March 28, 2024 |
| The US Dollar is trading higher this morning, following hawkish comments from Fed's Waller expressing concerns over recent economic reports and the level of inflation adding, "it is appropriate to reduce the overall number of rate cuts or push them further into the future in response to recent data". He did not rule out a June cut however, suggesting better inflation reports would make him more confident to support a rate cut. US interest rates jumped following his comments and are holding on to those gains. A stronger third look at Q4 GDP, is also putting pressure on US interest rates. Jobless claims remains low at 210,000, but continuing claims ticked up slightly to 1.819 million. The Bloomberg Dollar index is trading just above the 1,245 level, up 14-bps from yesterday and 31-bps from one week ago. The Dollar is trading near the high for the month, supported by quarter-end flows and a less dovish Fed. | |
| Canada: Canadian economic output increased slightly more than expected in January thanks to a recovery following the end of public-sector strikes in Quebec and a rebound in manufacturing activity. Gross domestic product grew 0.6% from the month before to 2.218 trillion CAD. The increase was the strongest monthly advance in GDP by industry in a year and beat the 0.4% consensus expectation of economists. On a one-year basis, GDP rose 0.9%. The Canadian dollar is testing its year-to-date low after Federal Reserve Governor Christopher Waller said the central bank should not rush to cut interest rates. Trader focus turns to Canadian and US data Friday and quarter-end flows. USDCAD moved to just below 1.3580 as of 8:41 am EST; poised to break a 3-day losing streak. WTI crude futures climbed 1.5% to $82.56 per barrel. The US two-year yield exceeds its Canadian counterpart by 44.2bps, up from 42.9bps on Wednesday. The 10-year yield spread is 74.5bps in favor of US vs 75bps in favor of US the previous session. Support comes in at 1.3448 and resistance at1.3627. | |
| China: CNH is down just over 0.1% as CNH shows its susceptibility to the broad dollar bid. China’s overnight repo rate is down 4 bps as the PBOC injects cash to help with quarter-end demand. According to Bloomberg, Chinese leader Xi Jinping said “China should enrich its toolbox of monetary policies and the central bank should gradually increase the buying and selling of government bonds in its open-market operations.” Once again, the PBOC set its yuan reference rate stronger than estimate (7.0948 vs. 7.2272). | |
| Europe: On the last trading day of the quarter, the euro made it way below the 1.08 level nearly 2% lower from its March peak but roughly 20bps lower month to date. The dollar is bid after Fed’s Waller made hawkish comments on US inflation and market appetite is seemingly resilient. His view is that inflation is “disappointing” and prompted him to back 2 of the 3 rate cuts this year and that the Fed should be more patient to easing since the economy is still broadly strong. Today, the PCE index reports which could cause intraday volatility if prices are indeed higher, and markets adjust their expectations of future Fed rate cuts. The euro is also being underpinned by softer German retail sales data that dropped 1.9% MoM versus 0.4% previously, marking its fourth monthly dip in a row. Labor data was also weaker as unemployment holds near a 2.5 year high of 5.9% and the jobless number rose for a 15th month in a row. Expect liquidity and flows to subside heading into the weekend as the US and EU take a holiday break. |
|
Your Foreign FiX
Thursday, March 28, 2024 |
| |
| The US Dollar is trading higher this morning, following hawkish comments from Fed's Waller expressing concerns over recent economic reports and the level of inflation adding, "it is appropriate to reduce the overall number of rate cuts or push them further into the future in response to recent data". He did not rule out a June cut however, suggesting better inflation reports would make him more confident to support a rate cut. US interest rates jumped following his comments and are holding on to those gains. A stronger third look at Q4 GDP, is also putting pressure on US interest rates. Jobless claims remains low at 210,000, but continuing claims ticked up slightly to 1.819 million. The Bloomberg Dollar index is trading just above the 1,245 level, up 14-bps from yesterday and 31-bps from one week ago. The Dollar is trading near the high for the month, supported by quarter-end flows and a less dovish Fed. | |
| Canada: Canadian economic output increased slightly more than expected in January thanks to a recovery following the end of public-sector strikes in Quebec and a rebound in manufacturing activity. Gross domestic product grew 0.6% from the month before to 2.218 trillion CAD. The increase was the strongest monthly advance in GDP by industry in a year and beat the 0.4% consensus expectation of economists. On a one-year basis, GDP rose 0.9%. The Canadian dollar is testing its year-to-date low after Federal Reserve Governor Christopher Waller said the central bank should not rush to cut interest rates. Trader focus turns to Canadian and US data Friday and quarter-end flows. USDCAD moved to just below 1.3580 as of 8:41 am EST; poised to break a 3-day losing streak. WTI crude futures climbed 1.5% to $82.56 per barrel. The US two-year yield exceeds its Canadian counterpart by 44.2bps, up from 42.9bps on Wednesday. The 10-year yield spread is 74.5bps in favor of US vs 75bps in favor of US the previous session. Support comes in at 1.3448 and resistance at1.3627. | |
| China: CNH is down just over 0.1% as CNH shows its susceptibility to the broad dollar bid. China’s overnight repo rate is down 4 bps as the PBOC injects cash to help with quarter-end demand. According to Bloomberg, Chinese leader Xi Jinping said “China should enrich its toolbox of monetary policies and the central bank should gradually increase the buying and selling of government bonds in its open-market operations.” Once again, the PBOC set its yuan reference rate stronger than estimate (7.0948 vs. 7.2272). | |
| Europe: On the last trading day of the quarter, the euro made it way below the 1.08 level nearly 2% lower from its March peak but roughly 20bps lower month to date. The dollar is bid after Fed’s Waller made hawkish comments on US inflation and market appetite is seemingly resilient. His view is that inflation is “disappointing” and prompted him to back 2 of the 3 rate cuts this year and that the Fed should be more patient to easing since the economy is still broadly strong. Today, the PCE index reports which could cause intraday volatility if prices are indeed higher, and markets adjust their expectations of future Fed rate cuts. The euro is also being underpinned by softer German retail sales data that dropped 1.9% MoM versus 0.4% previously, marking its fourth monthly dip in a row. Labor data was also weaker as unemployment holds near a 2.5 year high of 5.9% and the jobless number rose for a 15th month in a row. Expect liquidity and flows to subside heading into the weekend as the US and EU take a holiday break. |
|
|
 |
|
| |
Percentage Change |
| |
1M |
3M |
6M |
9M |
12M |
24M |
USDCAD |
0.10% |
1.82% |
-0.71% |
3.20% |
0.01% |
6.42% |
USDCNH |
0.80% |
1.26% |
-0.60% |
1.26% |
4.84% |
7.36% |
EURUSD |
-0.18% |
-1.45% |
2.45% |
-3.09% |
-2.19% |
0.57% |
|
| |
Annualized Forward Differential |
| |
1M |
3M |
6M |
9M |
12M |
24M |
USDCAD |
0.57% |
0.54% |
0.82% |
0.56% |
0.55% |
0.48% |
USDCNH |
1.40% |
1.79% |
3.28% |
2.26% |
2.26% |
2.01% |
EURUSD |
1.50% |
1.51% |
2.36% |
1.65% |
1.66% |
1.65% |
|
| |
Implied Volatilty |
| |
3M |
6M |
9M |
12M |
24M |
6M-RR |
USDCAD |
4.90% |
5.13% |
5.48% |
5.54% |
5.65% |
0.45% |
USDCNH |
3.96% |
4.65% |
5.46% |
5.77% |
6.06% |
0.47% |
EURUSD |
5.44% |
5.71% |
6.15% |
6.25% |
6.40% |
-0.60% |
|
|
| Canada GDP grows stronger-than-expected 0.6% in January |  | | | | | EUR Weakens Against USD Below 1.08 |  | | |
|
| Read our technical documentation to learn more about this data. |
|
|
|
| Questions, or thinking of trading? Contact the Foreign Exchange Trading Desk direct at 888-821-3600. |
|
|
|
|
| Get just the daily FiX information you want – set your preferences |
|
 |
Change
the currencies included in my Citizens Daily Foreign FiX email. |
|
|
|
Send us an email with a comment or question about the Citizens Daily FiX email. |
|
|
|
|
|
|
|
|
This document has been prepared for discussion and informational purposes only by Citizens Bank, N.A.
(Citizens). In the preparation of this document, Citizens has relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources. Citizens makes no representation or warranty (expressed or implied) of any nature, nor does it accept any responsibility or liability of any kind, with respect to the accuracy or completeness of the information in this document. The information in this document is subject to change without notice and Citizens does not undertake a duty or responsibility to update these materials.
Citizens is not acting as an advisor or fiduciary in any respect in connection with providing this information, and no information or material contained herein is to be relied upon for the purpose of making or communicating investment or other decisions nor construed as either projections or predictions. In no event should the information be considered recommendations to enter into transactions. Citizens and its affiliates, connected companies, employees or clients may have an interest in the financial instruments mentioned in this document.
To ensure that you receive our emails, please add mail@citizenscommercial.com to your address book.
Privacy and Security:
Please do not reply to this email. For inquiries kindly call 877.550.5933. Keeping your financial information secure is one of our most important
responsibilities. We will never ask you to send sensitive information via email or via a link in an email. If you receive a suspicious email claiming to
be from Citizens Commercial Banking please forward it to: abuse@citizensbank.com. For
an explanation of how we manage customer information, please read our Privacy Notice.
To opt-out of future promotional emails, please click here.
Citizens Bank | One Citizens Plaza | Providence, RI 02903
©2024 Citizens Financial Group, Inc. All rights reserved. Banking products and services are offered by Citizens Bank, N.A. Member FDIC. Securities products and services are offered through Citizens JMP Securities, LLC, Member FINRA, SIPC. Citizens Capital Markets, JMP Securities, DH Capital and Trinity Capital are brand names of Citizens Financial Group, Inc.
|
|
 |
 |
 |
|
