The Loonie is soaring. It has hit the jackpot due to robust economic growth, steady to firm oil prices, narrowing CAD/US interest rate differentials and broad US dollar weakness. This morning Statistics Canada announced 22,200 new jobs, beating the 19,000 forecast. The unemployment rate dipped to 6.2% from 6.3%. Also, capacity utilization came in at 85%. All in all, a good day for domestic data.
However, the USDCAD drop from 1.2105 to 1.2078, quickly reversed. That is likely due to profit taking ahead of the weekend, especially after Thursday’s heavy losses.
FX traders were busy in overnight markets. China data, the ECB outlook, a dovish Fed and Hurricane Irma concerns put downward pressure on the US dollar.
The antipodean currencies extended Thursday’s gains aided by mixed data from China. China Exports shrank, but Imports rose. AUDUSD rallied from 0.8041 to 0.8123 while NZDYUSD climbed to 0.7335 from 0.7230. Both currency pairs pared gains by the New York open.
USDJPY continued Thursday’s swoon dropping from 108.47 to 107.57, weighed down by bearish technicals, a dovish Fed and sliding US treasury yields.
EURUSD jumped to 1.2091 from 1.2018 in Asia. European traders took profits, and the single currency edged back to 1.2038 before resuming the uptrend. EURUSD is supported by expectations of ECB policy action in October.
Sterling rallied steadily and then accelerated on the break of 1.3150. Broad dollar weakness and slightly better than expected UK data fueled the rally.
UK House prices popped in August. The Halifax House Price index rose 1.1% (forecast 0.2%), and GBPUSD rose from 1.3034 to 1.3072. The soft US dollar profile helped the move.
Oil prices were steady in Asia but slipped in Europe. WTI is trading around $49.00/barrel, just about the middle of the $48.76-$49.23/b overnight range. Gold was a stellar performer gaining nearly $10.00/ounce.
USDCAD dropped in Asia, reaching a low of 1.2063, on the back of the broad dollar weakness and hawkish Bank of Canada expectations. Prices bounced from the low and USDCAD opened virtually unchanged from Thursday’s :
USDCAD Technical outlook:
The intraday and short term USDCAD technicals are bearish. The move below 1.2573 was the 76.4% retracement of the May 2015January 2016 range, and it suggests a 100% retracement will occur which would extend losses to 1.1920. Furthermore, there isn’t much in the way of support between 1.2060 and 1.1920.
The intraday technicals are bearish while prices are below 1.2130. For today, USDCAD support is at 1.2060 and 1.2000. Resistance is at 1.2140 and 1.2160.
Today’s Range 1.2060-1.2140
Chart: USDCAD 4 hour