Picture: creative commons
November 6, 2020
- Biden and Trump still neck and neck
- US NFP a tad better then expected, Canada Jobs data a tad weaker.
- US dollar consolidating losses
FX Ranges at a Glance (24 hours)
Source: IFXA Ltd/RP
FX Recap and Outlook: The Canadian and US employment reports were greeted with little fanfare, unlike the usual reactions. Traders just did not care. That’s because neither report will have any bearing on central bank action in the near term
Statistics Canada said “ Employment increased by 84,000 (+0.5%) in October, after growing by an average of 2.7% per month since May. The unemployment rate was 8.9%, little changed from September.
Source: Statistics Canada
The FX impact from the American employment data was minimal. Nonfarm Payrolls rose 638,000 compared to the consensus forecast for a 600,000 increase. The unemployment rate improved to 6.9% from 7.7%, due in part to election hires.
FX markets are in the thrall of US Presidential election dynamics. Trump is complaining about late ballots getting counted and Biden says all ballots should be counted. Who is right? A court will decide. However, if you mail a Christmas parcel in November or even December, and it doesn’t arrive until December 26, someone is not unwrapping your gift on Christmas morning. It missed! It’s late! It doesn’t count. Just a thought. 😊
The US dollar is consolidating losses from yesterday, as positive risk sentiment continues to ripple through markets. Traders are conveniently ignoring the rapidly rising number of coronavirus cases in America. Positive tests totaled 116,707 yesterday, compared to 104,004 on Wednesday. Europe and the UK are not unscathed, with lockdown measures imposed in Germany, France, and Great Britain.
The FOMC meeting was a yawn. Nothing changed, including the statement, which was identical to what they released September 16. The only difference was the date.
US nonfarm payrolls are expected to have risen 600,000 in October, and the unemployment rate to decline to 7.7% from 7.9%. The usual frantic FX price action following the data will be AWOL. The Fed is not going to move on interest rates any time in the next year, and today’s jobs data won’t make them change their minds.
EURUSD dipped to 1.1796 in Asia before climbing to 1.1876 in early NY trading. Hopes for a Biden presidency are underpinning prices. Traders dismissed ECB policymaker Luis de Guindos warning that Q4 GDP growth would be negative. EURUSD technicals are bullish but need to crack above resistance in the 1.1880-1.1930 area to avoid additional consolidation.
GBPUSD traded in a 1.3103-1.3156 range. EU Chief Brexit Negotiator Michel Barnier threw cold water on reports that a trade deal was imminent. He said the UK strategy is to leave as many as 30 topics open to be debated at a leaders meeting. He said the talks were not “on a trajectory” to get a deal.
USDJPY dropped to 103.19 from 103.75 and is sitting just above the overnight low. Caution ahead of the final vote count and low Treasury yields are also pressuring prices.
AUDUSD and NZDUSD are the two best performing G-120 currencies in the past 24 hours. They are benefitting from improved risk sentiment and better than expected data.
USDCAD is trading sideways in a 1.3043-1.3095 band. Weak oil prices are acting as a brake on losses, while positive global risk sentiment caps gains.
USDCAD Technicals: It’s crunch time. The intraday technicals are bearish below 1.3080, looking for a break of support at 1.3030 and 1.2990 to extend losses to 1.2830. A break above 1.3080 targets 1.3180. For today, USDCAD support is at 1.3030 and 1.2990. Resistance is at 1.3080, and 1.3150. Today’s Range 1.3030-1.3130
Chart: USDCAD 4 hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank