FX traders and market analysts did not expect much from today’s Canadian employment report. Boy, were they ever surprised. Statistics Canada announced Canadian employment rose by a stunning 55,000 jobs in May, including an increase of 77,000 full-time jobs.
Statistics Canada also offers the following comparison to the United States employment data.
“Adjusted to the concepts used in the United States, the unemployment rate in Canada was 5.6% in May, compared with 4.3% in the United States. In the 12 months to May 2017, the unemployment rate fell by 0.3 percentage points in Canada and by 0.4 percentage points in the Unites States”.
USDCAD dropped from 1.3510 to 1.3460 on the news.
And speaking of surprises, no one was more surprised than UK Prime Minister Theresa May this morning. She managed to turn her comfortable majority Conservative government into a “hung Parliament” after the elections ballots were tabulated. Sterling dropped from 1.2948 to 1.2637 on the news.
In Europe, traders were still dealing with the ramifications of the European Central Bank statement and ECB President, Mario Draghi’s press conference. EURUSD was weighed down as bullish positions were pared back following Mr. Draghi’s doveish press conference.
The fireworks from ex-FBI Director James Comey’s Senate testimony failed to materialize. Instead, it had all the “pop” of a soggy cherry bomb. Of course, the perspective changes dramatically depending if you are watching CNN or Fox News.
That helped USDJPY edge higher. It rose from 109.75 to 110.64 as risk aversion trades ahead of “Super Thursday” got unwound. And is now trading at the overnight peak, in New York.
Oil had a choppy overnight session. WTI dropped from $461.0 to $45.20 and then bounced back to $46.10 in Asia. In Europe, WTI slid down to $45.36 but spiked to $45.80 in early New York trading. The Middle East spat, high US crude inventories and positioning are weighing on prices.
The Canadian dollar was ignored in overnight trading but came to life after this morning’s domestic employment report.
USDCAD Technical outlook:
The USDCAD technical outlook is bullish. The uptrend from February is intact while prices are above 1.3440. That trendline is guarding added support from the 100 and 200 day moving averages.
The intraday technicals tell a different story. They are bearish following the break below 1.3480 and looking for more weakness down to 1.3430. If 1.3430 holds, the two week 1.3430-1.3540 range will still be intact.
For today, USDCAD support is 1.3440. and 1.3380. Resistance is at 1.3490 and 1.3540.
Today’s Range 1.3430-1.3490
Source: Saxo Bank