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Citizens Foreign Exchange: Your Foreign FiX for Friday, April 19 |
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Your Foreign FiX
Friday, April 19, 2024 |
| Israel’s counterattack on Iran last evening has sent a shock wave through the market, albeit a narrow attack and one that was expected. Price action suggest the market hopes there will be limited fallout and de-escalation is possible. The US Dollar is trading marginally lower this morning, after the Bloomberg Dollar index spiked to 1,271. US equity futures are trading lower this morning, and were already under pressure, with both the S&P and Nasdaq down the past five sessions. High-fliers like Tesla and Apple have lost favor among investors, with Tesla trading at a new 52-week low and many former bulls turning bearish. US yields are trading lower, but like the Dollar have reversed much of the move from earlier in the session. The US 2-year and 10-year trade at 4.97% and 4.60% respectively, up 7-bps and 8-bps over the past week. The OIS market is pricing a 12% chance for a Fed 25-bps cut in June and an 84% chance in September. For 2024, the market is pricing 38-bps of Fed cuts. The Bloomberg Dollar index is trading just below the 1,263 level, down from 1,271 from earlier in the session but up 29-bps from one week ago. The Dollar remains well supported by the Fed's message of "higher for longer" and geopolitical uncertainties. | |
| Canada: USDCAD begins the final session of the week once again down slightly as the loonie looks to end the week on a positive note. The pair is currently trading in the mid-1.3700s. Against its G-10 peers overnight the loonie was mixed showing minor strength against the New Zealand dollar (+0.19%) while showing weakness against the Swedish krona (-0.39%). Canada has no economics today. Oil (WTI) is down more than ½% on the day, currently trading at $82.28, a small move considering the retaliatory attacks by Israel on Iran overnight. Crude spiked to $86.20 overnight but quickly returned to current levels. With little of note scheduled today look for USDCAD to remain range-bound. Support comes in at 1.3712 with resistance coming in at 1.3855. | |
| Europe: Escalations in the Middle East are quickly turning markets risk-off on reports Israel retaliated on Iran. The euro dipped to a low of 1.0610 overnight before recovering some gains and is on track to end the week nearly unchanged from Monday’s open. The Fed’s higher-for-longer narrative is driving recent euro weakness. ECB officials are ‘carefully’ watching the depreciating exchange rate as it may impact inflation, however against a larger basket of currencies the depreciation has been modest. President Lagarde sees a clear sign of recovery for the economy, noting the ‘phenomenal’ job market. ECB’s Simkus told Bloomberg in an interview that a June cut could be followed by another one in July – the bank remains data dependent and ready to act based on how inflation develops. Expect elevated volatility today as the NY open digests the geopolitical developments. |
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Your Foreign FiX
Friday, April 19, 2024 |
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| Israel’s counterattack on Iran last evening has sent a shock wave through the market, albeit a narrow attack and one that was expected. Price action suggest the market hopes there will be limited fallout and de-escalation is possible. The US Dollar is trading marginally lower this morning, after the Bloomberg Dollar index spiked to 1,271. US equity futures are trading lower this morning, and were already under pressure, with both the S&P and Nasdaq down the past five sessions. High-fliers like Tesla and Apple have lost favor among investors, with Tesla trading at a new 52-week low and many former bulls turning bearish. US yields are trading lower, but like the Dollar have reversed much of the move from earlier in the session. The US 2-year and 10-year trade at 4.97% and 4.60% respectively, up 7-bps and 8-bps over the past week. The OIS market is pricing a 12% chance for a Fed 25-bps cut in June and an 84% chance in September. For 2024, the market is pricing 38-bps of Fed cuts. The Bloomberg Dollar index is trading just below the 1,263 level, down from 1,271 from earlier in the session but up 29-bps from one week ago. The Dollar remains well supported by the Fed's message of "higher for longer" and geopolitical uncertainties. | |
| Canada: USDCAD begins the final session of the week once again down slightly as the loonie looks to end the week on a positive note. The pair is currently trading in the mid-1.3700s. Against its G-10 peers overnight the loonie was mixed showing minor strength against the New Zealand dollar (+0.19%) while showing weakness against the Swedish krona (-0.39%). Canada has no economics today. Oil (WTI) is down more than ½% on the day, currently trading at $82.28, a small move considering the retaliatory attacks by Israel on Iran overnight. Crude spiked to $86.20 overnight but quickly returned to current levels. With little of note scheduled today look for USDCAD to remain range-bound. Support comes in at 1.3712 with resistance coming in at 1.3855. | |
| Europe: Escalations in the Middle East are quickly turning markets risk-off on reports Israel retaliated on Iran. The euro dipped to a low of 1.0610 overnight before recovering some gains and is on track to end the week nearly unchanged from Monday’s open. The Fed’s higher-for-longer narrative is driving recent euro weakness. ECB officials are ‘carefully’ watching the depreciating exchange rate as it may impact inflation, however against a larger basket of currencies the depreciation has been modest. President Lagarde sees a clear sign of recovery for the economy, noting the ‘phenomenal’ job market. ECB’s Simkus told Bloomberg in an interview that a June cut could be followed by another one in July – the bank remains data dependent and ready to act based on how inflation develops. Expect elevated volatility today as the NY open digests the geopolitical developments. |
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Percentage Change |
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1M |
3M |
6M |
9M |
12M |
24M |
USDCAD |
1.18% |
2.32% |
0.78% |
2.42% |
1.93% |
5.64% |
USDCNH |
-0.35% |
0.86% |
-0.52% |
-0.13% |
3.22% |
8.07% |
EURUSD |
-1.44% |
-1.85% |
-0.74% |
-2.71% |
-1.42% |
1.46% |
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Annualized Forward Differential |
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1M |
3M |
6M |
9M |
12M |
24M |
USDCAD |
0.55% |
0.59% |
0.98% |
0.71% |
0.71% |
0.68% |
USDCNH |
0.32% |
1.09% |
2.58% |
2.00% |
2.09% |
2.01% |
EURUSD |
1.49% |
1.57% |
2.50% |
1.78% |
1.80% |
1.82% |
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Implied Volatilty |
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3M |
6M |
9M |
12M |
24M |
6M-RR |
USDCAD |
5.48% |
5.58% |
5.83% |
5.84% |
5.98% |
0.75% |
USDCNH |
3.96% |
4.77% |
5.62% |
5.96% |
6.30% |
0.54% |
EURUSD |
6.42% |
6.50% |
6.80% |
6.84% |
6.99% |
-0.97% |
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| USDCAD on Pace to Close Down for the Week |  | | USDCAD vs Oil (WTI) 3-Day | | | EUR Weaker Amid Market Risk Aversion |  | | |
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| Read our technical documentation to learn more about this data. |
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