Many traders expected that this mornings US employment report would top the predictions.  They figured that if the previous two reports were soft because of nasty weather, today’s report would offer payback.  It did.  US nonfarm payrolls rose 223,000 (forecast 188,000) while the unemployment rate at 3.8%, was an 18 year low.

The USDCAD acted predictably, jumping to 1.3003 from 1.2948 but quickly backed off from the peak.  Traders are juggling flaming swords.  The Bank of Canada says that they are no longer “cautious” with their Canadian economic outlook although yesterday’s GDP report says they should be.  President Trump is slapping tariffs on Canadian steel and aluminum imports, even as the Nafta negotiations are happening.  Fading Eurozone political uncertainty still carries a whiff of risk aversion.

USDCAD direction will be dictated by US dollar sentiment, at least until Wednesday, when fresh Canadian economic data becomes available.

FX trading was unremarkable overnight.   Italian politicians beavered away and managed to cobble together a government acceptable to the President. Crisis averted (for now). Spain also got itself a new Prime Minister.  Incumbent Marian Rajoy lost his job to a no-confidence vote.  Socialist Pedro Sanchez replaces him.

Both developments served to underpin EURUSD which climbed to 1.1716 from 1.1666 with an assist from Markit Manufacturing PMI data for May.  (Actual 55.5 vs forecast 55.5) This morning’s US NFP report drove the single currency back to 1.1648.

Manufacturing PMI data in the UK also supported GBPUSD which rose from 1.3255 to 1.3311, encouraged by the Eurozone developments. GBPUSD dipped to 1.3278 after the US data but quickly recovered and is trading at 1.3330.

The US dollar eked out gains in Asia.  USDJPY drifted higher throughout the session, rising from 108.73 to 109.23, where it is trading in New York.  AUDUSD and NZDUSD suffered on position adjusting ahead of today’s US employment report.

USDCAD Technical Outlook

The intraday USDCAD technicals are bullish while prices are above 1.2820 looking for a break above 1.3010 and then 1.3040 to extend gains to 1.3080 and 1.3125.  A break below 1.2920 would target 1.2860 and then 1.2820.

Today’s Range 1.2950-1.3010