May 3, 2019

USDCAD Open (6:00 am EDT) 1.3468-71   Overnight Range 1.3444-1.3489

The reaction to the Nonfarm payrolls (NFP) report was underwhelming. The US was expected to have added 185,000 jobs in April, a forecast that had crept higher following Wednesday’s ADP employment report. Traders were expecting a topside surprise, and they got one. April NFP rose an impressive 263,000 but the devil was in the details, and the details were slightly disappointing. Average hourly earnings and average weekly hours were below forecasts although just marginally.

The US dollar popped immediately following the news but reversed the moves very quickly as traders rushed to protect profits from the pre-data US dollar rally.  EURUSD dropped from 1.1155 to 1.1135 and then climbed to 1.1162.

USDCAD popped from 1.3467 to 1.3489 then retreated to 1.3455. However, the intraday uptrend above 1.3430 is still intact, and prices are supported by the prospect of a more hawkish than previously thought Fed and a still dovish Bank of Canada. Prices are tracking USDX movements closely.

In Asia, Japan and China were closed.  AUDUSD and NZDUSD consolidated Thursday’s losses.  Both currency pairs are under pressure from broad US strength and concerns about dovish central bank meetings next week.  The Reserve Bank of Australia meeting is Tuesday, and the Reserve Bank of New Zealand is Wednesday. USDJPY drifted in a 111.42-52 range.

In Europe, EURUSD inched lower despite better than expected eurozone inflation data.  April CPI rose 1.7% (forecast 1.6%) while core-CPI rose 1.2% (forecast 1.0%).That data appears to have been trumped by weaker than expected March PPI data and the prospect of a robust US NFP report.

GBPUSD traded lower, falling from 1.3042 to 1.2992 in part due to a rally in EURGBP.  UK services PMI returned to expansionist territory, rising 50.4 in April after March’s disappointing 48.9% result but broad US dollar strength weighed on the currency.

Oil prices are consolidating above yesterday’s lows.  WTI fell from $63.44 to $60.98 and is trading at $61.67/b in New York.  Concerns about rising US crude supplies and US dollar strength are undermining prices. USDCAD Technical Outlook

The USDCAD technicals are bullish above 1.3370, looking for a break above 1.3480 to extend gains to 1.3520 and then 1.3580. A break of 1.3580 puts the May 2017 peak of 1.3780 in play.  For today, a move below 1.3430 would extend losses to 1.3370. Today’s Range 1.3430-1.3530

Chart: USDCAD hourly with USDX