The US dollar exploded higher against all the G-10 currencies on a surprising 295K gain in non-farm payrolls that has traders chanting ”rate hike in June, rate hike in June. They may get disappointed later on, but for now they are on a roll. EURUSD was already heavy going into the data but still managed to drop another .0100 points from 1.0960 to 1.0860 in a flash. The details of the report were a tad less than stellar-hourly wages were weak and the January result was revised lower. But for now, no one cares.

The loonie got an extra whack with the bad news stick in the form of a weak Merchandise Trade report.  The 2.8% decline in exports (due to the drop in oil) combined with the NFP data drove USDCAD from 1.2462 to 1.2620 in a flash.

However, it is not all doom and gloom for the Canadian dollar.  The short term outlook for oil prices has improved and WTI is still above $50.00/bbl.  Demand for Canadian dollars against EUR, GBP and JPY will help offset USDCAD demand. And, most importantly, USDCAD remains confined to the 1.2360-1.2660 range, intact since early February.

USDCAD technical Outlook

The intraday USDCAD technicals turned bullish with the move above 1.2520 and accelerated on the break of 1.2550. Upside momentum has waned at 1.2620 for now, but further gains to the 1.2660-80 area are likely. A break above 1.2680 will lead to 1.2800. For today, USD support is at 1.2560 and 1.2520.  Resistance is at 1.2620, 1.2640 and 1.2670

Range for balance of the day 1.2560-1.2640