Overnight Range 1.2993-1.2970

FX-At-A Glance

NOTE:  This chart represents gain (or loss) of G10 currencies vs. the US dollar from NY close-Jul 7 (4pm) to July 8 8;400 am PST-post NFP

FX is a numbers game and today the number was huge.  Specifically, the US nonfarm payrolls report. NFP showed a gain of 287,000 jobs, much higher than what were viewed as optimistic forecasts for a gain of 170,000.  The previous months 38,000 gain was revised down to 11,000 making a two-month average of just under a 150,000 per month. The Verizon strike has played havoc with the US employment data which questions the reliability of this report.

The US dollar exploded higher against the Canadian dollar, Euro and Swiss Franc. Still, it is just one number and won’t do anything to change July rate hike expectations but will provide a degree of comfort for those looking towards December for an interest rate increase.

The spike in USDCAD got an extra-boost on the back of weaker than expected Canadian employment data. Canada shed 7,000 jobs in June while the unemployment rate dipped to 6.8%. This is another dodgy data report due to the impact of the Alberta wildfires and should be discounted.

Overnight, FX markets were fairly quiet as traders awaited the US employment report and the G10 currencies traded in fairly narrow ranges.  GBPUSD didn’t make any new lows and drifted modestly higher in subdued trading.

This mornings USDCAD rally stalled around 1.3080 and then promptly dropped back to 1.3015 indicating that markets are skeptical over the validity of both employment reports.

USDCAD technical outlook

The intraday USDCAD are bullish while trading above 1.2910 and supported by the break of resistance in the 1.2990-1.3010 area which suggests another probe of the 1.3080-1.3110 resistance zone is likely. A move below 1.2900 would negate the upside pressure and lead to additional 1.2750-1.3100 range trading.

For today, USDCAD support is at 1.2990 and 1.2940.  Resistance is at 1.3080 and 1.3120.

Chart USDCAD hourly