USDCAD collapsed when US nonfarm payrolls missed the forecast. Nonfarm payrolls were expected to report a gain of 180,000 jobs in August. Instead, only 156,00 new jobs were created. USDCAD was already under pressure. It hadn’t recovered from Thursday’s collapse when it dropped from 1.2660.
It added to those losses during the overnight session and continued to drift lower in New York trading. USDCAD was at 1.2454 before the NFP data and plunged to 1.2342 immediately afterwards.
The short term outlook for USDCAD is bearish. The downtrend from June is intact and yesterday’s blow-out GDP report could give the Bank of Canada an excuse to raise interest rates next Wednesday.
Overnight, FX markets were subdued.
The antipodean currencies slid. NZDUSD was pressured by disappointing Terms of Trade data and concerns over the prospect of a new Labour Government.
AUDUSD traders ignored a bump in both the AiG Performance of Manufacturing Index, and China Caizin Manufacturing PMI reports. AUDUSD dropped from 0.7955 to 0.7923.
Both currency pairs erased the overnight losses after today’s US data.
Japanese data didn’t do anything for USDJPY. The currency meandered in a 109.93-110.21 range. USDJPY plunged to 109.56 from 110.16 after today’s data
EURUSD and GBPUSD traded in narrow ranges and ignored Markit Manufacturing PMI reports. Eurozone PMI was unchanged while UK PMI data jumped to 56.9 from 55.3 in July. The EURUSD reaction to the NFP data was muted, due to the ECB meeting next week. That wasn’t the case for GBPUS which rallied to 1.2988 from 1.2930.
ECB official Ewald Nowotny appeared to dismiss concerns that the steep rise in EURUSD is a barrier to tapering. He said, “I would not over-interpret or dramatise this development
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish following the move below 1.2605 yesterday and the subsequent drop below 1.2500. The June downtrend from 1.3055 remains intact while prices are below 1.2660 Today’s break of the 1.2415-1.2450 support area will lead to 1.2250 and then 1.2110. For today, USDCAD support is at 1.2340 and 1.2315. Resistance is at 1.2415 and 1.2460
Today’s Range 1.2340-1.2415
Chart: USDCAD daily