September 6, 2019

USDCAD Open (6:00 am EDT) 1.3214-18      Overnight Range 1.3181-1.3224

USDCAD sank following the US and Canadian employment reports.  Canada gained 81,100 jobs in August, well above the forecast of 15,000 jobs.  Even though 57,200 of those jobs were part time, full-time jobs rose 23,800.  Canada is averaging 12,200 full-time jobs, for the past three months.

The US employment report disappointed analysts who were forecast a gain of 158,000.  Nonfarm payrolls rose 130,000 and the unemployment rate was unchanged at 3.7%.

USDCAD dropped from 1.3230 pre-data to 1.3181, immediately afterwards.  AUDUSD and NZDUSD rose, marginally.

Traders may be more concerned about what Fed Chair Jerome Powell has to say.  He delivers a speech at 9:30 PST titled Economic Outlook and Monetary Policy

Overnight, the US dollar traded mixed,  losing ground against the commodity bloc currencies (CAD, AUD, NZD) while rising against Sterling and the Swiss franc.  The Euro and Japanese yen were unchanged from yesterday’s close.

FX Market Snapshot

Change in Currency value vs the US dollar-   NY close  to NY open

The Peoples Bank of China (PBoc) announced a 50 basis point cut in the Reserve Requirement Ratio (RRR), just as Toronto traders were getting started. There wasn’t any reaction in the FX market as the move was expected.

In Europe, EURUSD ignored better than expected Eurozone Q2 GDP data which rose 1.2% y/y compared to the 1.1% forecast. The previous release was revised higher to 1.3% from 1.1% y/y. The Q2 employment change came in as forecast, but the last release was revised higher.  EURUSD traders didn’t care. The US employment report was ignored and EURUSD remains just above the bottom of its 1.1031-50 overnight range.

GBPUSD traded lower overnight, weighed down by UK political developments.  Boris Johnsons plan to prorogue parliament was ruled legal by the high court, and Jeremy Corbett’s Labour Party will not support a vote for an early election.  GBPUSD dropped from 1.2342 to 1.2287 before rising to 1.2304 in New York trading. 

USDJPY inched higher in a narrow range.  Prices are supported by rising US Treasury yields. The NFP report barely caused a ripple.

Next week, the European Central Bank (ECB) meeting on September 12, is the marquee event.

USDCAD Technical View

The intraday USDCAD technicals are bearish following the break of support in the 1.3250-80 area and looking for additional losses on a move below 1.3180.  However, the monthly chart shows that the long-term uptrend from September 2012, which has survived numerous tests, is still intact while prices are above 1.2950. For today, USDCAD support is at 1.3180 and 1.3140.  Resistance is 1.3250 and 1.3290.  Today’s Range 1.3170-1.3270

Chart:  USDCAD monthly

Source: Saxo Bank