Canada created 54,000 jobs in July and the unemployment rate fell to 5.8% from 6.0%. Unfortunately, the gains were all part-time jobs.  Full-time employment fell 28,000. USDCAD dropped to 1.3037 from 1.3090 but the losses were recovered in moments.

US July CPI was the other major data point of note.  The headline number rose 2.9%, y/y (forecast 3.0%).  The dip was offset by the 2.4% increase in core CPI (forecast 2.3%, y/y) The US dollar drifted higher on the news but stayed within its overnight ranges vs the majors.

There isn’t any other major data due today.  The US dollar posted large gains this week which suggests it may be vulnerable to a profit-taking sell-off later today.

FX markets were very active overnight.  Thanksgiving is still a long way off, but Turkey was on the FX menu.  Naturally, the US administration is the head chef cooking up the turmoil. The Turkish Lira collapsed at the start of the European session.  USDTRY soared to 6.2800 from 5.2660 on Wednesday. The US imposed sanctions on a couple of Turkish government officials arising from a lack of progress over the arrest of a US Pastor two years ago, Turkey is threatening sanctions of their own which may include charges against several US military officers in Turkey.

The US dollar rallied on the back of risk aversion demand.  EURUSD dropped from 1.1535 to 1.1433 in a fall exacerbated by Eurozone concerns about some EU bank’s exposures to Turkey which the Financial Times identified as BBVA, UniCredit and BNP Paribas.  The EURUSD technicals are bearish following the break below support in the 1.1500-05 area.

GBPUSD tracked EURUSD lower despite UK economic data being mostly positive.  Q2 GDP rose 0.4%, q/q, as expected.  Industrial Production and Manufacturing Production beat expectations as did quarterly Business Investment in Q2.  It didn’t help GBPUSD which dropped from 1.2835 to 1.2737.

USDJPY traded erratically inside a 110.62-111.15 range and opened in New York with a gain.  Risk aversion demand for yen and a drop-in US Treasury yields contributed to the volatility.

AUDUSD got hammered after the Reserve Bank of Australia downgraded its inflation outlook in it’s quarterly Monetary Policy Report.  It expects inflation at 1.75% for the rest of the year, down from 2.0% previously.  AUDUSD plunged from 0.7387 to 0.7282.

USDCAD Technical Outlook

USDCAD is in a minor uptrend above 1.3050, looking for a break above 1.3120 to extend gains to 1.3190.  A break below 1.3040 targets 1.2990.  Longer term, USDCAD is in a 1.2990-1.3190 band with a break eithr side yielding 0.200 points.

Today’s Range 1.3020-1.3120