Photo: CRN Australia

September 3, 2021

NFP rises 235,000, well below forecast of 750,000

Weaker than expected Eurozone data shows growth slowing

US dollar extends loss following NFP

FX at a Glance:

Source: IFXA/RP

USDCAD Snapshot   Open 1.2548-52, Overnight Range (post-NFP)1.2495-1.2558, Previous close 1.2553

USDCAD accelerated lower after the US employment report came in well-below forecasts.  The result takes the heat off of Fed Chair Powell to start tapering QE earlier than expected.

Traders ignored weak Chinese Caixin Services PMI data and growing talk that China’s economy is slowing.  USDCAD sank as commodity bloc currencies gained.

Rising WTI oil prices undermined USDCAD as well. Oil traders are betting on Opec’s upgraded demand forecasts and ignoring China’s growth concerns.  WTI climbed to $70.50/b

USDCAD downside may be limited due to election uncertainty, and a recent spate of weaker than expected domestic economic data.  The Bank of Canada monetary policy meeting is Wednesday with Governor Tiff Macklem speaking on Thursday.

Technical view:  The intraday USDCAD technicals show a battle between the bulls and bears and USDCAD bears appear to have the upper hand. Fibonacci retracement of the June-August 1.2020-1.2944 range shows the break below 1.2590 (38.2%) will extend losses to 1.2480 (50%) then 1.2371 (61.8%).  However, bulls point to the uptrend line from June 1 at 1.2520, which was briefly breached post-NFP.  The technicals are a tad sketchy.  FX moves are exaggerated as they are occurring in very-thin markets.

For today, support is at 1.2520 and 1.2480.  Resistance is 1.2570 and 1.2620. Today’s range 1.2490-1.2560

Chart USDCAD 4 hours -4 months

Source: Saxo Bank

G-10 FX recap and outlook

EURUSD held on to recent gains and traded quietly in a 1.1867-1.1883 range.  Eurozone economic reports were weaker than expected.  Retail Sales fell 2.3% m/m in July (forecast 0.1%), and Composite PMI dropped to 59 in August from 59.5 previously.  Some analysts suggest that Eurozone growth momentum is fading, while others believe today’s results are just post-pandemic normalization.  EURUSD technicals are bullish and looking for a break above 1.1910 to target 1.2100.

GBPUSD is at the bottom of its overnight 1.3821-1.3844 range, mainly due to pre-NFP positioning. UK Services PMI fell to 55 from 55.9, which is blamed on supply shortages and a lack of tourists.  GBPUSD is bullish above 1.3770 with a break of 1.3850 targeting 1.3900.

USDJPY drifted lower in a 109.80-110.06 range, with prices weighed down by expectations for a weak NFP result. The Nikkei 225 rose 2.06% supported by talk that COVID-19 restrictions will be eased and by the news that Prime Minister Suga will not take part in the LDP leadership race.

AUDUSD and NZDUSD rallied on the back of broad US dollar weakness while ignoring soft Services PMI data from China.

FX action will decline sharply after lunch as those that can get an early start to the long weekend.

Chart of the Day-US dollar Index

Source:  Koyfin

FX open, high, low, previous close

Source: Saxo Bank

China Snapshot

Today’s Bank of China Fix, 6.4577     Previous day 6.4590                        

Shanghai Shenzhen CSI 300 fell 0.54% to 4843.06

Caixin Services PMI 46.7 (forecast 52.6, Previous 54.9)

Reports say China will accelerate measures to attract overseas investors

Chart: USDCNY 1 month

Source: Yahoo Finance