June 7, 2019

USDCAD Open (6:00 am EDT) 1.3363-66    Overnight Range (as of 6:00 am PDT) 1.3298-1.3366

The US only added 75,000 jobs in May as the nonfarm payrolls result disappointed those expected a gain of 185,000 jobs.  Even worse, average hourly earnings rose just 3.1%, below the 3.2% forecast.  The weaker than expected data will increase the pressure on the Fed to cut US interest rates.  The US dollar sank on the news.  EURUSD jumped to 1.1318 from 1.1262 immediately while USDJPY collapsed to 108.02 from 108.60.

Canadian reported another stellar employment report, adding 27,700 jobs in May.  All the jobs were full-time, and the unemployment rate dropped to 5.4% from 5.7%.  One sour note was that self-employed jobs rose 62,000.  The “self-employed” category has an abundance of recently redundant employees who do not want to say the are unemployed.  Very few people are likely to leave paid employment with benefits and holidays to work on their own.

USDCAD dropped on the NFP and Canadian data, breaking major support in the 1.3330 area and setting the stage for further losses to 1.3219, 50% Fibonacci retracement level of Oct/Dec 2018 range.

Asia FX markets were quiet but livened up in Europe.   EURUSD rallied yesterday, despite a dovish ECB policy statement and the increased risk of a new easing program. Prices were trapped in a tight 1.1258-78 range overnight.   Weaker than expected German trade and Industrial Production data as well as a German growth forecast cut by the Bundesbank, offset bearish US dollar sentiment on Fed rate cut hopes.

GBPUSD is trading at 1.2717, just below the overnight peak of 1.2720 supported by better than expected Halifax House price data, Consumer Inflation expectations, and broad US dollar weakness.  Today is Prime Minister Theresa May’s last day.

USDCAD Technicals

The intraday and short term USDCAD technicals are bearish.  Last week’s rejection of gains above 1.3550 followed by the break of support at 1.3430 suggests a short term top is in place.  The move below the 1.3322 (38.2% Fibonacci retracement level of the Oct/Dec 2018 range) targets the 76.4% retracement level at 1.2988. For today, USDCAD support is at 1.3270 and 1.3220.  Resistance is at 1.3320 and 1.3380.  Today’s Range 1.3270 1.3320

Chart: USDCAD daily