January 10, 2020
USDCAD open 1.3070-74 (6:00 am EST) Overnight Range 1.3031-1.3073
The Canadian employment scene looks a lot better than it did November when it lost 71,200 jobs. Statistics Canada announced Canada gained 35,200 jobs in December, all of which were full-time. The unemployment rate dropped to 5.6% which is still 0.1% higher than it was in October.
US Nonfarm payrolls were a tad weaker than expected. The US added 145,000 jobs which although below the consensus forecast of 164,000, still keeps the three month average gains around 185,000.
The US dollar is only slightly weaker following the data but still poised to finish the first full week of trading in 2020 with gains across the G-10 spectrum
FX Market Snapshot
Change in currency value against the US dollar Mon. NY open to Fri. NY open (6:00 am EST)
Source: Saxo Bank/IFXA
Overnight, FX markets were cautious ahead of today’s employment reports.
GBPUSD hit both ends of its overnight range of 1.3050-90 range after remarks from a Bank of England policymaker. Silvana Tenrikyo said she would favour a rate cut if the economy continues to slow. She added that the risks to the BoE’s outlook were “to the downside. The intraday GBPUSD technicals are bearish while prices are below 1.3090, with a breach of 1.2990 extending the downside to 1.2905.
EURUSD opened at the bottom of its narrow 1.1090-1.1110 range. The single currency has a negative bias due to bearish technicals, weak Eurozone data, and a dovish ECB monetary policy. The post-payrolls bounce to 1.1112 is already fading. The intraday technicals are bearish below 1.110, which guards the short term downtrend line at 1.1160 and are targeting a retest of the November 29 low of 109.85.
The USDJPY rally continues to stall at major resistance in the 109.80 area. Prices need a fresh incentive to drive higher which could come in the shape of another stellar nonfarm payrolls result. US Treasury yields above 1.85%, bullish technicals and broad US dollar strength are supporting prices.
AUDUSD was the best performing currency overnight and the only one to show a gain against the US dollar. November Retail Sales rose 0.9% m/m, well above the 0.4% forecast. AUDUSD opened in New York at the top of its overnight 0.6882-0.6881 range. The intraday technicals flipped to bullish with the break of the downtrend line at 0.6865, which had been intact since January 2, and target 0.6930.
USDCAD climbed steadily yesterday and peaked after Bank of Canada Governor Stephen Poloz’s comments were thought to be a tad more dovish than expected. The Governor noted that “plenty of uncertainty remains around the implications of the US-China agreement for Canadian exports and around whether any more of the new tariffs can be rolled back.”
The rebound in the Canadian employment data, combined with mild disappointment with the NFP results drove USDCAD from its overnight peak to minor support in the 1.3030 area. The intraday technicals are bearish but need to break support below the 1.3105-10 area to negate the underlying bullish bias. Nevertheless, the downtrend from the middle of December is still intact while prices are below 1.3120. Today’s Range 1.3010-90
Chart: USDCAD 4 hour
Source: Saxo Bank