Canada jobs surge, US jobs shrink
US debt ceiling crisis averted until December 3,2021
US dollar opens mixed compared to Thursday, CAD outperforms
FX at a Glance:
USDCAD Snapshot Open 1.2539-43, Overnight Range 1.2492-1.2561, Previous close 1.2553
USDCAD plunged following the sharply higher than expected employment gain in September. Canadian employment is now back to pre-pandemic levels, with 157,100 jobs added in September. The forecast was for a gain of 60,000. Even better, full-time jobs increased by 193,600.
USDCAD extended overnight losses, falling from 1.2530 pre-data, to 1.2492, post data.
The currency pair is trading at a one month low, with today’s jobs report and surging WTI oil prices fueling the losses. WTI oil bounced from a low of $75.30 yesterday to $79.63 overnight after news the White House declined to release oil from the Strategic Petroleum reserves.
USDCAD continues to outperform its G-10 peers as an improving economic outlook for Q3 and Q4, and high oil prices offsets broad US dollar demand from rising Treasury yields. Those yields dipped modestly, after US NFP data disappointed.
Technical view: The intraday and longer term USDCAD technicals are bearish. The downtrend from the September peak of 1.2775 is intact while prices are below 1.2590 (4 hr chart) while the long-term downtrend comes into play at 1.2690. A move below 1.2480 targets 1.2270.
For today, USDCAD support is at 1.2480 and 1.2440. Resistance is 1.2560 and 1.2610. Today’s range 1.2460-1.2530
Chart USDCAD monthly
Source: Saxo Bank
G-10 FX recap and outlook
Traders plan and the gods laugh. Today’s US nonfarm payrolls (NFP) report was expected to show a gain of 500,00 jobs and therefore guarantee the Fed kicks-off a tapering program in November.
NFP disappointed, rising just 194.000, but it was not all bad. Monthly job growth averaged 561,000, this year, and today’s data reflected a 74,000 gain in leisure and hospitality employment. Even better average hourly earnings rose 0.6^ (forecast 0.4%) and the unemployment rate fell to 4.8% from 5.2%.
The US dollar fell following the release, but the declines were modest. The NFP data will not derail Fed tapering plans in November as the Fed always says they “never react” to one data point.
US government officials agreed to extend the debt ceiling until December 3, which was hinted at yesterday.
Wall Street is poised to open in positive territory supported by the post-NFP dip in 10-year Treasury yields from an overnight peak of 1.60% to 1.568% in NY.
EURUSD traded quietly but has drifted above the top of its overnight 1.1542-1.1568 range reaching 1.1585 post-NFP. Weaker than expected German trade data ignored. However, further gains may be limited due to widening US and Eurozone interest rate differentials and unsettled German politics.
GBPUSD trades in a 1.3585-1.3656 band but struggles to make headway due to fears of an economic slowdown due to the UK gas shortage and supply bottlenecks.
USDJPY dropped to 111.52 following the US employment data as Treasury yields retreated from their peak. The Nikkei rallied 1.34% on improved risk sentiment from better than expected Chinese Caixin Services PMI data for September.
AUDUSD and NZDUSD are supported by rising commodity prices and tracking broad US dollar sentiment. Both currency pairs rallied after the US jobs report.
Chart of the Day- Canadian employment
Source: Statistics Canada
FX open, high, low, previous close
Chart: Saxo Bank
China Snapshot -Welcome Back
Today’s Bank of China Fix 6.4604, Previous 6.4854,
Shanghai Shenzhen CSI 300 rose 1.31% to 4,929.94
Caixin Services September PMI 53.4 (forecast, 50.7, previous 46.7)
Caixin press release: “September PMI data showed renewed and strong increases in both new work and output across China’s service sector, as firms commented that the recent fall in domestic COVID-19 cases had boosted market conditions.”
Chart: USDCNY 5 days
Source: Yahoo Finance