Just what the doctor ordered.  Dr. Poloz, that is. Fresh off delivering a rosy economic outlook to a German magazine where he was explaining the Bank of Canada’s need to increase interest rates, Statistics Canada delivers a stellar employment report.  Canada employment rose 45,000 in June, trouncing the forecast of a 10,000 increase and the gains included 8,100 full-time jobs.

USDCAD plunged from 1.2986 to 1.2909 on the news.

The USDCAD drop was encouraged by the FX market reaction to the US nonfarm payrolls data. NFP rose 222,000 vs. forecasts for 179,000 gain, Despite the rise, traders were disappointed by the tiny dip in average hourly earnings to 0.2% from a forecast of 0.3%, even though it is unchanged from the May data.

EURUSD dropped from 1.1410 to 1.1385 and then spiked to 1.1438, all within minutes. Sterling sank, soared, and then dropped again and is now trading at 1.2894, where it was before the release.

USDJPY traded in a similar fashion to cable; sinking, soaring and then back to where it started.

Chart:  FX majors and USDCAD trading around US NFP release

Source: Saxo Bank

The overnight session was a lot more subdued with traders in park ahead of the US jobs report.

USDJPY was the story in Asia. It rallied from a low of 113.10 to 113.83 supported by increased buying of Japanese Government Bonds (JGB) and “just-in-case” NFP is stronger than expected.

AUDUSD inched higher inside a .7573-.7599 range in a profit taking move following this week’s decline. NZDUSD held on to yesterday’s gains and hovered around the 0.7280 area.

Sterling was the big mover in European trading as it managed to erase all its gains since Tuesday.  GBPUSD dropped from 1.2973 to 1.2910 after UK Housing, Industrial production, Manufacturing Production, and Trade all were below forecasts.

WTI oil prices reversed almost all the overnight drop from $44.94.  It is trading at $44.74 after touching $44.05 in early New York trading.  Prices were under pressure after Morgan Stanley energy analysts reportedly issued a report suggesting that the rig count would need to drop by close to 150 rigs to balance production in 2018.

Canada’s Ivey PMI data is forecast to rise to 57.7 from 53.8.  The G-20 is in full swing and the Trump-Putin meeting will be a key focus.

USDCAD Technical outlook:

The USDCAD technicals are bearish while prices are below 1.3080, the downtrend line from June 8. That line is being guarded by resistance in the 1.3015 area.  The break below .1.2915 will extend losses to 1.2770 and then 1.2500.  For today, USDCAD support is at 1.2860 and 1.2810.  Resistance is at 1.2920 and 1.2960

Today’s Range 1.2860-1.2940

Chart: USDCAD daily