Canada Exports posted a record high.  The 4.1% rise in June totaled 50.7 billion.  It was the first-time exports were above $50 billion in a single month.  Canada’s merchandise trade deficit narrowed to a mere $0.63 billion.  Forecasts were expecting a $2.30 billion deficit.  The result will put a smile on Bank of Canada Governor Stephen Poloz’s face.  He has been patiently waiting for exports to climb.  Today’s data helps to validate the July 11 rate hike and his optimistic outlook.

The Canadian dollar got another assist from weaker than expected US nonfarm payrolls reports.  Recent economic releases had analysts expecting an upside surprise to the 190,000 jobs that were forecast.  It didn’t happen.  NFP rose 157,000.  The disappointment was offset by the drop in the unemployment rate to 3.  /9% from 4.0%.  USDCAD is back below 1.3000, trading at 1.2986 with a bearish bias below 1.3120.

The US dollar dipped on the news but has since recouped most of the losses.  USDJPY is the laggard.  Prices dropped from 111.60 to 111.36, and they are trading just above that level.

GBPUSD is sitting at pre-data levels, undermined by Bank of England Governor Mark Carney comments in a BBC interview this morning.  He said the UK still faces an “uncomfortably high risk” of a ”no-deal Brexit.

The overnight session was choppy due to regional data and position adjustments ahead of this morning’s US data.  AUDUSD’s bounce from slightly better-than-expected Retail Sales data for June (Actual 0.4% vs forecast 0.3%) was cancelled by a drop in the Caixin China Services PMI report.  (Actual 52.8 vs forecast 53.7) AUDUSD popped to 0.7405 after the US data but has dipped back to 0.7384.

Monday is a holiday in Canada which suggests domestic trading action will taper off after lunch.

USDCAD Technical Outlook

USDCAD is in a narrow 1.2970-1.3090 range.  A break either side is worth a 0.0070-point move.  Longer term, the uptrend from the February low of 1.2260 is intact while prices are above the 1.2940-60 area.  For today, USDCAD support is at 1.2970 and 1.2940.  Resistance is at 1.3040 and 1.3090

Today’s Range 1.2970-1.3040