December 6, 2024
- US NFP rises 220,000 (forecast 200,000)
- Canada gains 50,500 jobs, beats forecast-details weak.
- US dollar dips post-NFP, but losses are minor.
FX at a Glance
Source: IFXA/RP
USDCAD open 1.4041, overnight range,1.4019-1.4104, close 1.4025
USDCAD reluctantly inched lower on the back of modest but widespread US dollar selling pressure ahead of today’s nonfarm payrolls report. It was all for nought. The Canadian employment report triggered at spike to 1.4104. where USDCAD is trading now while the US jobs data was ignored.
Canada added 50,500 new jobs easily topping the forecast for a 25,000 increase but the headline number masks a very weak report. It seems only the government is hiring. Public Sector jobs increased by 45,000 while the private sector only added 6,500. Government jobs accounted for over 42% of all jobs created in Canada since November 2023, highlighting a significant economic imbalance. While public sector growth provides job stability, an over-reliance on government hiring signals underlying weaknesses in private sector performance. The private sector drives productivity, innovation, and exports, which are essential for long-term economic health.
The “Trump-factor” has USDCAD on edge. Trump’s threat of 25% tariffs would be devastating to the domestic economy if implemented. The price action suggests that traders have little faith that the current government is smart enough to manage the risk.
Oil prices didn’t get much support after OPEC announced it would delay planned production increases until the end of April 2025.
Traders don’t see the delay doing much to offset a surplus of supply in the first half of 2025. WTI is at the bottom of its 67.55-68.49 range.
USDCAD Technicals
The intraday technicals are neutral inside a 1.4010-1.4010 range. A topside break will extend gains to 1.4160 while a move below 1.4010 suggests a test of support at 1.3960.
The longer term technicals are unchanged and bullish USDCAD. The uptrend line from June 2021 is intact while prices are above 1.3460 and that level is guarded by support at 1.3860 and 1.3960. The move above 1.3980 opens up a new 1.3880-1.4170 range and that is likely to be the case until Trump’s inauguration.
For today, USDCAD support is 1.4030 and 1.4010. Resistance is 1.4110 and 1.4150.
Today’s Range: 1.4030-1.4130.
Chart: USDCAD daily
Source: Investing.com
Nonfarm Payrolls and Data-Dependent Fed
Nonfarm payrolls failed to live up to the hype. The US added 220,000 jobs in November, which was above the 2000,000 expected, but revisions to the September and storm-damaged October numbers were low. October was only revised up by 24,000. Futures traders raised the odds that the Fed will cut rates by 25 bps on December 18, to 83.6% from 78% pre-data.
Equities Trading Cautiously
Asian equity markets followed Wall Street’s lead and closed with losses. Australia’s ASX 200 dropped 0.64%, while Japan’s Topix fell 0.55%. Chinese indexes bucked the trend, with the Hang Seng Index rising 1.56% on anticipation of more stimulus announcements from the government.
European bourses rallied, led by a 1.36% jump in the French CAC-40 index after National Party leader Marine Le Pen made nice noises about paring deficits. The German Dax is up 0.21%.
S&P 500 futures are close to flat (-0.10%), while the US 10-year Treasury yield is 4.186%. Gold (XAUUSD) is steady at 2635.70.
EURUSD
EURUSD consolidated yesterday’s gains in a 1.0566-1.0595 range then popped to 1.0631 after the US nonfarm payrolls data delivered a “nothing special” result. Earlier, prices had been underpinned by a modest dialing back of French political concerns. National Party leader Marine Le Pen helped calm the waters when she said she was not looking for Macron’s resignation. German Industrial Production fell 1.0% in October and 4.5% y/y, which helps to limit EURUSD gains.
GBPUSD
GBPUSD traded higher in a 1.2740-1.2774 range then popped to 1.2807 in the initial reaction to the jobs data. The gains are likely to be faded ahead of next week’s US inflation data. UK House prices rose 1.3% in November and 4.8% y/y, which supported the gains.
USDJPY
USDJPY bounced in a 149.77-150.70 range then dropped from 150.540 to 150.15 after NFP. Traders are just spinning their wheels ahead of the BoJ and FOMC monetary policy decisions in two weeks.
AUDUSD and NZDUSD
AUDUSD traded with a bearish bias in a 0.6417-0.6456 range due to the lingering effects of Wednesday’s weak GDP report.
The RBA monetary policy meeting is Tuesday, and they are expected to leave rates unchanged. NZDUSD traded negatively in a 0.5843-0.5889 range and is in a downtrend channel while below 0.5890.
USDMXN
USDMXN inched higher in a 20.1875-20.2422 band after finding a bottom at 20.1610 yesterday following softer-than-expected weekly jobless claims data. Yesterday’s low was shattered after NFP and USDMXN hit 20.1155. The losses are slowing being erased,
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC Fix: 7.1848 vs exp. 7.2396 (prev. 7.1879
Shanghai Shenzhen CSI 300 rose 1.31% to 3973.14
Chart: USDCNY and USDCNH
Source: Investing.com
