US nonfarm payrolls beat the 195,000 forecast and recorded an impressive 228,000 job gain. However, the initial reaction to sell US dollars implies that traders were either not impressed, or expected the gain and took profits on speculative short dollar positions. The unemployment rate was unchanged but average hourly earnings rose 0.19%. The initial dollar sell-off was reversed and prices returned to pre-data levels.
The US government put a band-aid on their budget woes. Last night, Congress voted for a two-week extension of federal funding, avoiding a government shutdown tomorrow.
The US dollar caught a bid on the news. USDJPY extended Thursday’s gains and rose from 113.08 to 113.57 where it opened in New York.
The other major news was that the EU and the UK inked a deal to move on to the next stage of Brexit negotiations. Essentially, Britain caved into all of the EU’s demands, although the Irish border issue is still unsettled.
Sterling rallied on the news, climbing from 1.3455 to 1.3519 but couldn’t hang on them. GBPUSD opened in New York at 1.3464, just above the overnight low. GBPUSD ignored October Trade, Industrial Production and Manufacturing data as they were all close to the forecasts.
EURUSD traded lower throughout Asia and Europe and remains offered in early New York trading. The temporary resolution to the US government shutdown issue, rising expectations of a tax reform deal sooner rather than later and forecasts for better-than expected nonfarm payrolls data this morning are behind the move.
AUDUSD and NZDUSD were sidelined. Both ignored better than expected China Trade data traded and stayed in narrow ranges albeit with a negative bias ahead of today’s US data.
WTI oil prices climbed from $56.57 to $57.24 where they opened in New York
USDCAD opened virtually unchanged from yesterday’s close. The jump in WTI oil prices will limit USDCAD gains and implies a 1.2780-1.280 trading range.
USDCAD Technical outlook:
The USDCAD technicals are bullish and looking for a break above 1.2915 to extend gains to 1.3050 and then 1.3160. Failure to break 1.2915 will lead to 1.2660-1.2915 consolidation. For today, a move below 1.2810 will see a test of support at 1.2770
Today’s Range 1.2870-1.2870
