November 8, 2019

USDCAD open 1.3162-66 (6:00 am EST)    Overnight Range 1.3162-1.3195

Canada Labour Force Survey results were below forecasts, but not too bad.   Canada job gains were flat, down a mere 1,800, which is impressive considering the 136,800 new jobs created in August and September.  The unemployment rate was unchanged at 5.5%.  Building Permits dropped 6.5% compared to August which was revised down to 5.7%from 6.1%.  Housing Starts were also a tad lower than in September.

The news gave USDCAD a tiny boost taking prices to 1.3230 from 1.3202. The impact from the news is already fading and traders have refocused on US dollar demand form US/China trade talks developments.

The US dollar surged yesterday and again overnight on talk that the US and China agreed to roll back tariffs in phases, which was confirmed by US officials. However, other stories suggest that there is a lot of “pushback” against removing the tariffs by other sources. Nevertheless, Wall Street wants to believe a deal will be a reality, and FX traders are buying dollars because of trade deal hopes.

The US dollar is closing the week on a firm note with gains across the board since the New York open on Monday.

 FX Market Snapshot Daily

Change in currency value against the US dollar from Mon. NY open to  Fri. NY open

EURUSD traded quietly in Asia but came under fresh selling pressure in Europe. Traders ignored news of a rebound in German exports and an increase in the German trade surplus, preferring to jump all over the US/China tariff roll-back story.  A repeal of tariffs between the two nations is expected to stoke the American economy while underscoring the Eurozone’s economic shortcomings. EURUSD is trading at 1.1029 in Toronto, below the overnight low of 1.1035.

GBPUSD is suffering from the “Bank of England blues”. BoE Governor Mark Carney and company left UK interest rates unchanged.  The result was expected, but the decision was not unanimous. Two MPC members dissented and wanted rates cut immediately. The BoE has a dovish bias and is concerned about downside risks. GBPUSD dropped from 1.2872 yesterday, before the BoE announcement to 1.2796, in New York today.

USDJPY surged alongside a big jump in US Treasury yields. The idea that repealing China tariffs will jumpstart the US economy has fueled the gains. The 10-year US Treasury yield was 1.703% last Friday, and it is 1.92% today. USDJPY climbed to 109.40 from 109.16 overnight.

The Reserve Bank of Australia monetary policy statement re-affirmed the RBA’s dovish bias. It said rates can still go lower if required. AUDUSD dropped on the news and the broad US dollar strength, falling from 0.6905 to 0.6866. The bearish AUDUSD sentiment remind Kiwi traders of the RBNZ’s negative interest rate outlook and NZDUSD dropped to 0.6337 from 0.6380.

USDCAD Technical Outlook

The intraday USDCAD technicals turned bullish with the break above resistance in the 1.3190-1.3210 area, which targets further gains to 1.3240 and 1.3290.  The uptrend from October 28 is intact while prices are above 1.3140 and the long term uptrend from September 2017 is intact above 1.3040.  In addition the move above the 100 day moving average at 1.3193 targets the 200 day moving average of 1.3294.  for today, USDCAD support is at 1.3210 and 1.3180.  Resistance is at 1.3240 and 1.3290.  today’s range 1.3200-1.3270

Chart USDCAD 1 hour

Source: Saxo Bank