Overnight Range 1.3189-1.3266      

USDCAD plunged from 1.3250 to 1.3189 immediately following the release of the Canadian employment report.  StatsCanada reported that employment rose 54,000 (0.3%) in December.  The Canadian Trade report also showed a modest improvement. The USDCAD decline was aided by a weaker than expected US nonfarm payrolls report that posted a gain of 153,000 jobs rather than the 178,000 that was expected. The silver lining in the US report was the 0.4% jump in average hourly earnings; from 2.5% to 2.9%

That wasn’t the case for the rest of the G10 currencies.  The silver lining in the US report was the 0.4% jump in average hourly earnings; from 2.5% to 2.9%.  That led to broad-based US dollar demand.  EURUSD dropped from 1.0593 to 1.0545 while USDJPY spike up to 116.62 from 115.88.

Overnight, the FX markets behaved differently. The brakes were applied to the US dollar slide in a nervous session.

The Peoples Bank of China (PBoC) fixed the yuan (CNY) to the US dollar at 6.8668, the strongest it has been since December 6 and  down from Thursday’s 6.9307 fix. Still, USDCNY was well above its worst levels yesterday.  The consensus is the rising US interest rates will drive CNY lower over time, despite the PBoC’s efforts to skin speculators.

Australia posted a robust November Trade surplus of AUD1.24 billion, surpassing the forecast for a AUD 500 million deficit. AUDUSD recouped all its earlier losses and rallied from 0.7313 to 0.7350.  NZDUSD tracked Aussie higher

USDJPY bounced from a low of 115.08 in Asia to 116.38 in early European trading.  That move was due in part, because USDCNY had ended its free-fall, in addition to position adjusting ahead of nonfarm payrolls data.

EURUSD traded sideways and ignored Eurozone data releases and the softer tone to Eurozone equity indices.  There was a lot of economic data released.  The Economic Confidence Indicator for December rose to 107.8, up from Novembers 106.6 reading.  Consumer Confidence and Retail Sales results were unchanged.

GBPUSD dropped from 1.2430 to 1.2355 overnight which is still well-above yesterday’s 1.2276 low.

USDCAD drifted higher within a narrow range, content to take direction from US dollar moves against the majors.

Additional USDCAD losses may be hard to achieve if the US dollar continues to climb vs. the majors. The Canadian employment numbers are subject to big revisions and the glow from today’s data will fade quickly.

USDCAD Technical outlook:

The USDCAD technicals are bearish.  The downtrend from the December 28 peak of 1.3596 remains intact while prices are below 1.3405.  That level is being guarded by an intraday downtrend that began with the move through support at 1.3380 which remains intact while prices are under 1.3270.  Yesterday’s break below the 100-day moving average at 1.3260 has shifted the focus to the 200-day moving average at 1.3095, which is being protected by the May uptrend line that comes into play at 1.3170.  For today, USDCAD support is at 1.3190 and 1.3160.  Resistance is at 1.3270 and 1.3320

Chart: USDCAD 1 hour