The Canadian dollar soared after the release of the US and Canadian employment reports. StatsCanada announced that Canada gained 19,400 jobs, well above the 5,000 that was forecast. The US report was ugly which helped the Loonie rally. US nonfarm payrolls recorded a 98,000 gain in jobs, a disappointing performance, and a far cry from the 180,000 jobs that was expected. The US dollar dropped across the board.
Overnight, the FX markets were frothy. Asia kicked into full “risk aversion mode when President Trump ordered a “targeted military strike” on the Al Shayrat airfield in Syria as retaliation for Syria’s use of chemical weapons.
The Japanese yen soared and the US dollar rallied on the news. USDJPY dropped from 110.90 to 110.12 while the greenback posted gains against the other G10 currencies, including the Swiss franc.
Gold and oil prices leapt higher. WTI rose 1.5%, from $51.70 to $52.52/barrel. Gold jumped $18.90/oz. spiking
When it became clear that President Trump had no plans for further hostilities, risk aversion dissipated.
Sterling showed signs of life. GBPUSD barely budged during the missile strike reaction but reacted on data. Weak Manufacturing Production and Industrial Production data combined with a widening of the UK trade deficit drove GBPUSD from 1.2477 to 1.2414.
By the time New York open, FX markets had returned to normal. The week’s ranges were still intact and traders bided their time until the payrolls report.
USDCAD Technical outlook:
USDCAD has languished within a 1.3370-1.3450 band all week. The intraday technicals are mildly bearish while prices are below 1.3415 and supported by the break of the uptrend line from the 1.3284 March 31 low. However, a decisive break below the 1.3350-60 area is needed to extend losses and lead to a test of 1.3250 support. A break above 1.3450 shifts the focus to 1.3550.
Today’s Range 1.3320-1.3410
Chart: USDCAD 2 hour