USDCAD Overnight Range 1.3393-1.3469        

A 3.6% jump in Canadian exports helped to offset the damage from the surprisingly robust US nonfarm payrolls report and has USDCAD hovering above the 1.3380-1.3400 support area.

 Canada’s Merchandise trade deficit widened by far less than forecast led by gains in auto shipments. That news took the sting out of the US NFP report which posted a gain of 242,000 jobs and an upward revision to the January data.  The wrinkle was that the average hourly earnings component dropped to -0.1% from 0.5% in January. The weakness in average hourly earnings is seen as evidence that the FOMC does not need to be in a hurry to raise interest rates.

Asia enjoyed a fairly active session, AUDUSD had a good day with the release of another strong piece of data.  Retail Sales rose 0.3%, which bettered the December 0.0% gain and AUDUSD is now probing strong resistance in the 0.7380-0.7400 area. Not to be outdone, the Bank of Japan governor, Kuroda, speaking before Parliament, warned that Japanese rates could fall further into negative territory. USDJPY bounced off the 113.20 lows but remains well-below 114.50-60 resistance.

It was not all that exciting in Europe.  In fact, it was painfully slow, akin to listening to Justin Trudeau talk economics. EURUSD drifted to the high end of its recent range on a report that the ECB had no consensus on stimulus other than another 10 bp interest rate cut.  If accurate, it would be disappointing for EURUSD bears and tarnish Draghi’s reputation.

The US dollar is under pressure at the moment, in part due to concern that Mario Draghi will be unable to deliver “bazooka” style stimulus and today’s sentiment that US rates are still a long way from moving higher.  In addition, short EURUSD position on anticipation of a strong NFP print are getting squeezed due to the elevation of importance of the average hourly earnings component of the report.

USDCAD technical outlook

USDCAD is in a well defined downtrend channel bound by 1.3480 on the top and 1.3330 on the bottom. Inside this band, there is support in the 1.3370-90 area with additional major support at 1.3280 representing the 200 day moving average.

Forecast Range for the day 1.3370-1.3460

Chart USDCAD 1 hour