FX Weekly Update – November 13th, 2023
Posted Under: Weekly updates
Oil prices fell to $76 last week, supporting the dollar when the currency market was quiet after the dollar moved higher. There needed to be more ranges to develop further strength in the dollar and we begin this week at the same levels it closed Friday evening. The calendar is filled with data this week. Inflation numbers in the U.S., Euroland, and U.K., retail sales, housing starts, and several production indexes will keep traders on the front three inches of their seats.
EUR (1.0680): Last week’s low of 1.0656 is the first line of support, followed by 1.0620 and 1.0580. Resistance will come in at 1.0720 and 1.0750. The lack of follow-through to the downside last week does give us pause. The single-currency has been trading with little conviction. The two wars and falling inflation keep risk managers focusing on short-term strategies rather than extending positions.
GBP (1.2230): The pound is slightly more exciting than the euro. With a full economic data calendar, there should be enough information to push the GBP beyond its recent range (1.2180-1.2320.) Support at 1.2180 has held several times last week. A break below that level targets 1.2100. Resistance at 1.2240 holds the key to the next move toward 1.2280.
JPY (151.70): USD/JPY is trading at the same high level as it was two weeks ago. The dollar fell to 149.15 after touching 151.70; it is poised to grind through to 153.00. The BoJ has been eerily quiet as the dollar has rallied above 150.00. The lack of attention may be a ploy to get more long dollar positions in the market before the BoJ intervenes. If the intervention happens, 149.15 and 148.75 are support/targets for the currency pair.
CAD (1.3810): The risk for USD/CAD is to trade at least to 1.4000. Oil has been volatile but regardless of its rallies CAD could not strengthen. Now that oil has traded to $76, there is more reason to sell CAD and buy the USD. Those who need to buy CAD should wait until the 1.4000 area is seen. Support for the dollar is at 1.3615.
MXN (17.6500): USD/MXN quickly moved to 17.8500 late last week, but sellers came in and pushed the dollar lower to the current level. There has not been any data or news that would impact the peso although oil weakness should weaken the peso as part of the Mexican government’s revenue. Overall dollar strength should also push USD/MXN to another test of 17.8500 and 18.2000. 17.2600 is the first support level. Below that, the trendline at 16.9000 is a crucial area. Below 16.9000, it can deal at 16.4500 and then 15.8000.
CNH (7.3140): There is not much to say that changes the scenario for the CNH. The PBOC continues to keep its tight control on the currency. The range of 7.3470 to 7.2620 will continue to define USD/CNH.
This week’s economic calendar: