FED: Reserves Drop Sharply On TGA Tax Collection Rebuild
Bank reserves dropped by $203B in the week to Wednesday, per the Fed's weekly H.4.1 release. The current level of $3.28T is an 8-week low, which combined with the $114B pullback in ON RRP takeup, meant combined reserves + ON RRP fell to levels last seen in mid-February, and prior to that, 2021.
- This was mainly a result of the jump in the Treasury General Account, to $600B at Wednesday's close vs $315B a week prior, amid the mid-April tax collection deadline.
- The rise in TGA cash is only likely to be temporary as the Treasury runs down its holdings anew amid the debt limit impasse and ahead of the next major tax date in June, which means reserves should pick up again.
- However, the medium-term downward trajectory in reserves + ON RRP is clear, and will continue past the debt limit episode amid continued QT.
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ASIA: Coming Up In Asian Markets On Wednesday
| 0720GMT | 1520HKT | 1820AEDT | Indonesia BI Decision |
| Philippines Feb BoP |
ASIA: Coming Up In Asia Pac Markets Today
| 2145GMT | 0545HKT | 0845AEDT | New Zealand Q4 Current Account |
| 2330GMT | 0730HKT | 1030AEDT | Australia Feb Westpac Leading Index |
| 2350GMT | 0750HKT | 1050AEDT | Japan Feb Trade Balance |
| 2350GMT | 0750HKT | 1050AEDT | Japan Jan Core Machine Orders |
| 0000GMT | 0800HKT | 1100AEDT | Australia 2035 Bond Sale |
| 0430GMT | 1230HKT | 1530AEDT | Japan Jan F Industrial Production |
| 0600GMT | 1400HKT | 1700AEDT | Japan Feb F Machine Tool Orders |
| BoJ Decision |
USDCAD TECHS: Approaching A Key Near-Term Support
- RES 4: 1.4793 High Feb 3 and key resistance
- RES 3: 1.4700 Round number resistance
- RES 2: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 1: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- PRICE: 1.4308 @ 16:42 GMT Mar 18
- SUP 1: 1.4242 Low Mar 6 and a key near-term support
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
The bull cycle in USDCAD that started Feb 14 remains intact, and moving average studies reinforce this condition - they remain in a bull-mode position. However, the latest pullback has exposed a near-term key support at 1.4242, the Mar 6 low. A clear break of this level would undermine a bullish theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. Key resistance and the bull trigger, is at 1.4543, the Mar 4 high.
