April 6, 2023

  • Canada adds 34,700 jobs, unemployment rate unchanged at 5%.
  • US weekly jobless claims rise higher than expected, previous week revised upwards.
  • US dollar opens modestly higher compared to Wednesday.

FX at a glance

Source: IFXA Ltd/RP

USDCAD Snapshot: open 1.3474-78, overnight range 1.3449-1.3488, close 1.3457

USDCAD bounced within a narrow range overnight and with risk sentiment modestly negative, the currency pair had a bit of a bid.

Nothing changed after another stellar Canadian employment report. Employment rose by 34,700, fare exceeding the forecast for a 10,000 gain.  Traders yawned and USDCAD barely budged.

The BoC Business Outlook Survey and Survey of Consumer Expectations suggested a slowing growth outlook, which is what the BoC wanted to see, and suggests they will leave rates unchanged at the April 12 meeting.

Oil prices traded sideways in a $79.68-$80.53/barrel range.  Prices retreated from the peak after yesterday’s ADP employment and ISM Services PMI data pointed to a slowing US economy which increased recession fears.

USDCAD trading will be very quiet this afternoon as traders get an early start to the Easter weekend.

USDCAD Technical Outlook

 The intraday technicals turned bullish yesterday and the nascent uptrend is intact above 1.3440.  The rally needs to overcome resistance in the 1.3530-60 area to be sustained.

 A break below the 1.3380-1.3400 support zone sets the stage for further losses to 1.3260.

For today, USDCAD support is at 1.3430 and 1.3380.  Resistance is at 1.3510 and 1.3540.

Today’s range 1.3400-1.3500

Chart: USDCAD daily

Source: Saxo Bank

G-10 FX recap and outlook

Traders are worry-warts by nature and there is a smorgasbord of worries to choose from. Those worries include inflation, global growth, geopolitical issues to name a few, and all are on display today.

Chinese authorities are spitting mad that the US had the audacity to meet with the leader of a foreign nation, without getting Beijing’s express permission. Sky News Arabia claims the Kremlin says there is no prospect of peace in Ukraine.

In addition, a series of weak US economic reports have forced traders to choose between fretting about a recession or inflation.

US recession fears rose again today after a series of employment reports pointed to a slowing economy.  Weekly jobless claims rose 28,00 higher than expected while the previous week’s results were revised 48,000 higher. The US employment picture worsened with Challenger Job cuts rising 15% in March. That news is on top of the poor ADP employment data yesterday.

Tomorrows US nonfarm payrolls report looks vulnerable to a disappointment and the reaction to an adverse number may be exaggerated as it is released on Good Friday. Most of the G-10 markets are closed and US desks are sporadically staffed. The bond market is open until noon, FX desks will have a skeleton staff, but equity markets are closed. S&P 500 futures are unchanged.

Asian equity markets closed lower led by a 1.22% drop in Japan’s Nikkei 225 index. European bourse’s opened flat but have ground out gains since, with a 0.71% rise in the UK FTSE 100 index leading the charge higher. S&P 500 futures are flat.

EURUSD is adrift in a1.0986-1.0917 band with prices near to the overnight low following the US data.  ECB Chief Economist Philip Lane spoke with a hawkish tones saying said that a May rate hike would be appropriate if the ECB’s projections are on track.

GBPUSD traded sideways with a negative bias in a 1.2422-1.2486 band.  Traders ignored news that UK house prices were a slightly higher in March.

USDJPY traded in a 130.79-131.78 band with the peak occurring in New York following the US data. The rally occurred despite the US 10-yearTreasury yield sitting at 3.29%. 

AUDUSD traded negatively falling to 0.6667 in NY after peaking at 0.6724 in Asia. Traders ignored news that Australia’s Trade Surplus increased to $13.8 billion in February.

FX open, high, low, previous close as of 6:00 am ET

Source: Saxo Bank

China Snapshot

Chinese markets are closed Wednesday for Tomb Sweeping Day

Bank of China Fix:  6.9747, Previous: 6.8699

Shanghai Shenzhen CSI 300 fell 0.16% to 4096.64.

Caixin March Services PMI 57.8 (forecast 54, February 55)

Chart: USDCNY six months

Source: Bloomberg