The US added another 312,000 jobs to the economy. Average hourly earnings beat the 3.0% forecast and rose 3.2%. A stellar result. The FX reaction-underwhelming. EURUSD dropped to 1.1365 from 1.1400 but quickly settled in at 1.1380. USDJPY climbed to 108.42 from 108.09 and then fell to 108.23. The understated reaction may be due to the upcoming panel discussion with Fed Chair Jerome Powell and former Chairs, Janet Yellen and Ben Bernanke today at 7:15 am PDT. Markets are more interested to see how Mr Powell reacts to the recent spate of mixed economic data and the stock market meltdown.
The Canadian employment report was a non-event. Canada added 9,300 jobs, beating the 5,000 that was predicted but well below November’s 94,100 gain. USDCAD reacted to the US data, touching 1.3470 before retreating to pre-data levels.
USDCAD continues to be weighed down by rising oil prices. WTI oil gained 5.9% from yesterday’s $45.70/barrel low to today’s $48.40/b peak. Prices are supported by positive news on the US/China trade talk front. The Americans are sending a negotiating team to China for new trade discussions on Monday. The American Petroleum Institute (API reported a drop of 3.22 million barrels in US crude inventories for the week ending December 28. The Energy Information Administration (EIA) is expected to provide similar results this morning.
Overnight, FX markets were busy. AUDUSD and NZDUSD were supported by better than expected China Caixin Services PMI data which rose 53.9. (forecast 52.9) News that the US was sending a trade delegation to China on January 7 helped. Prices haven’t strayed too far from New York opening levels.
EURUSD traders dismissed soft Eurozone Services PMI data which was offset by better than expected German Services PMI.
GBPUSD drifted higher in tandem with EURUSD. UK data releases were mixed, and Brexit is still a dog’s breakfast.
The robust NFP report and the news about US/China trade talks supported US equity futures, which point to a positive opening for Wall Street and it helped to lift US Treasury yields as well.
USDCAD Technical Outlook
The intraday USDCAD technicals flipped to bearish with the break of support at 1.3520 yesterday. That level will revert to resistance today. A break below 1.3420 suggests further losses to test the October uptrend line that comes into play at 1.3340. A break below 1.3340 gives scope to further losses to 1.3120. USDCAD support is at 1.3420 and 1.3380. Resistance is at 1.3480 and 1.3520. Today’s Range 1.3420-1.3480