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February 5, 2021

USDCAD open (6:00 am ET) 1.2795-99,  Overnight Range 1.2788-1.2831,  Previous Close 1.2824

FX Ranges at a Glance:

Source: IFXA Ltd/RP

FX Recap and Outlook:  Kermit the Frog said, “it’s not easy being green.” Canadian retail workers are saying “It’s not easy being Canadian. The Trudeau government’s total mismanagement of the COVID-19 pandemic, and their lackadaisical attitude towards obtaining vaccines, is entirely behind the domestic employment debacle.

The 213,000 jobs that disappeared were entirely part-time and in Ontario and Quebec.  That’s because those provinces suffered under strict, lock-down measures due to skyrocketing numbers of new coronavirus cases and a lack of vaccines.   USDCAD is trading inside its overnight range of 1.2787-1.2831.

South of the border, nonfarm payrolls rose 49,000 (forecast 50,000), and the unemployment rate fell to 6.3% from 6.7%  The US dollar slid on the news as it suggests the economic rebound is less robust than expected.

EURUSD traded in a 1.1953-1.1987 overnight and then jumped to 1.2023 after the NFP data.  Further gains may be limited due to ongoing Euro-area issues including a slow roll-out of COVID-19 vaccines, political uncertainty in Italy, and existing lock-downs in many regions.

GBPUSD traded erratically in 1.3667-1.3711 range and drifted to the bottom of the early NY trading range.   Prices jumped to 1.3718 following the NFP data.  Traders continue to digest the Bank of England’s upgraded inflation forecast and the lower probability of negative interest rates.

USDJPY traded with a positive bias in a 105.35-105.66 range, supported by firm US Treasury yields, then jumped to 105.76, post-NFP, as US 10-year Treasury yields climbed to 1.17%.

AUDUSD and NZDUSD tracked broad US dollar moves, and both rallied after the employment data.  AUDUSD received added support from upbeat comments by RBA Governor Phillip Lowe.

Global equity traders followed Wall Street’s lead and bought stocks.  Equities are getting a huge amount of traction from chatter around Biden’s stimulus plan.  A watered-down version (from proposed $1.9 trillion to $1.3 trillion) is expected to get approved.  The NASDAQ has gained 20%, S&P 500 15%, and DJIA 13%., since Biden’s election, in anticipation of a vaccine-fueled economic boom, in a low-interest rate environment.

USDCAD Technicals: The USDCAD downtrend from March 2020 is alive and well below 1.2890, looking for a test of support at 1.2520, last seen in April 2018.  The downtrend line rejected a topside break at the end of January, and yesterday’s attempt fell short at 1.2842.  A move below 1.2760 suggests another short term top is in place, and a retest of 1.2520 is likely.  For today, USDCAD support is at 1.2760 and 1.2710.  Resistance is at 1.2840 and 1.2890  Today’s Range 1.2710-1.2810

Chart: USDCAD daily

Source:  Saxo Bank

FX open (6:00 am EDT) High, Low, and previous close

Source:  Saxo Bank