May  10, 2019

USDCAD Open (6:00 am EDT) 1.3454-57   Overnight Range 1.3386-1.3483

USDCAD collapsed when Statistics Canada said the economy added 106,500 jobs in April.  Even better, 73,000 of those jobs were full-time.  The unemployment rate dropped to 5.7% from 5.8.  USDCAD smashed through support at 1.3430, triggering a wave of stop-loss selling and opening the door to a test of the uptrend line from January 2019 at 1.3330.

The US CPI report was a tad softer than predicted.  Headline CPI rose 0.3% in April (forecast 0.4% m/m and Core CPI rose 0.1% rather than 0.2% m/m expected

The US dollar was already under pressure in early New York trading, and it retreated further. EURUSD  is probing this week’s top of 1.1243.  Prices are supported by a mix of profit taking ahead of the weekend and comments by an ECB official suggesting no new monetary stimulus is needed.

GBPUSD traders had a lot of data to digest. Q1 GDP rose 0.5% q/q, as expected while Industrial Production, Manufacturing Production and Total Business Investment data were better than expected. GBPUSD bounced between 1.2993 and 1.3024 when the data was released and back at the top of its overnight range after the US data

The China/US trade talks continuing even after President Trump raised tariffs from 10% to 25% effective today.  China has promised to retaliate but at the moment is showing restraint.

There is a school of thought that suggests some agreement will be reached today, even if it is just to continue the talks and the tariff increase will be put on hold.

China equity traders took the tariff hike in stride.  The Shanghai Shenzhen CSI 300 index soared 3.6%, to 3,730.45, although there are reports that the rally got a little help from the government.

USDCAD Technicals

The USDCAD technicals flipped to bearish this morning with the break of support at 1.3430. A decisive break of minor support at 1.3390 will extend losses to 1.3330. For today, USDCAD support is at 1.3390, 1.3360 and 1.3330.  Resistance is at 1.3430 and 1.3470.  Today’s Range 1.3360-1.3430