January 8, 2021
- US loses 140,000 jobs
- Canada employment falls by 62,600
- US dollar modestly lower after the data
FX Ranges at a Glance:
Source: IFXA Ltd/RP
FX Recap and Outlook: The US Bureau of Labor Statistics said: “Nonfarm payroll employment declined by 140,000 in December, and the unemployment rate was unchanged at 6.7 percent. The decline in payroll employment reflects the recent rise in the number of coronavirus (COVID-19) cases and increased efforts to contain the pandemic”. Analysts predicted a gain of 71,000.
The US dollar ticked lower immediately after the NFP report, but those losses evaporated quickly as the focus shifted to expectations for substantial new stimulus programs from Joe Biden’s administration.
The US political drama will continue to provide a distraction for markets but should have little impact on trading unless Trump does something stupid.
EURUSD opened in the middle of its 1.2214-1.2272 overnight range and then retested the top after the NFP report. Eurozone November unemployment fell to 8.3% from 8.5%, but the news was ignored. The EURUSD technicals are bullish while prices are above 1.2200, representing the uptrend line of the December rally.
GBPUSD broke through the top of its overnight 1.3540-1.3604 range, reaching 1.3620 after the NFP data. Broad US dollar weakness is supporting the currency pair. The existing stringent coronavirus lockdown measures in the UK, may cap the upside, but hopes for a robust post-lockdown economic rebound will limiting losses.
USDJPY bears are getting concerned. Hopes that prices will drop to 101.20 are rapidly fading, thanks to the break above 103.90 overnight, which risks a retest of the 105.40 area. The currency pair is underpinned by broad US dollar strength and the steep rise in Treasury yields.
AUDUSD and NZDUSD tracked US dollar sentiment, and they opened close to unchanged compared to Thursday’s close.
USDCAD traders totally ignored the weaker than expected domestic employment report. Canada lost 62,600 jobs compared to forecasts for a loss of 27,500, and the unemployment rate ticked higher, rising to 8.6%. No one cared. USDCAD direction was determined by US dollar sentiment and that sentiment is bearish. WTI oil prices are well above $50.00/barrel which is also weighing on prices.
USDCAD Technicals: The USDCAD technical are unchanged from yesterday. The downtrend channel from the middle of December is intact while prices are below 1.2750. Only a decisive topside break would negate the downside grind. The weekly chart paints a clear picture. The USDCAD downtrend is intact and looking for a test of support in the 1.2500 area .For today, USDCAD support is at 1.2660 and 1.2610. Resistance is at 1.2740 and 1.2790. Today’s Range 1.2630-1.2710.
Chart: USDCAD weekly
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank