Over-hyped and under-delivered.  That sums up today’s US and Canadian employment reports.  The US added 209,000 jobs in July, handily beating the forecast of 183,000.  Even better, the unemployment rate dropped to 4.3% from 4.4%, although that was expected.  Even hourly earnings were higher in July than in June.  Obviously, the US dollar soared, right?

Not quite.  EURUSD dropped from 1.1876 to 1.1826 on the news, but quickly rebounded to 1.1850.  Traders quickly realized that the Fed is grappling with inflation concerns not employment.  Today’s data didn’t do anything to change that.  Still, EURUSD has had a good rally this week, and may retreat ahead of the weekend.

Canada’s employment report was close enough to keep the “robust economy” story alive.  Canada added 10,900 jobs and they were all full-time.

Canada’s Trade report was released at the same time.  The trade deficit widened to $3.6 billion with a drop in Exports notable.

USDCAD bounced within a 1.2558-1.2625 range around the data and is currently trading at the top of that band.  The drop in exports, combined with still elevated short USDCAD positions and the Canadian holiday on Monday is a recipe for added gains.

The NFP data didn’t do Sterling any favours.  GBPUSD traded in a narrow band overnight but it dropped from 1.3145 to 1.3085 after the release.

USDJPY roared higher, rising from 110.05 to 110.70. However, it remains inside this week’s trading band.

The antipodeans dropped on the US data.  AUDUSD is back to the bottom of this week’s range, now trading at 0.7917.  NZDUSD is at 0.7412 which is above the low.  Both currency pairs are still inside their two week range.

Overnight, the RBA Monetary Policy Statement Report downgraded 2017 GDP growth forecasts and expressed concern about a strong currency.  That was old news.

Bank of England Deputy Governor Broadbent said “I think there may be some possibility for interest rates to go up a little.” However, he expressed the same concerns about the impact of Brexit on the UK economy traders ignored his remarks.

Monday is a holiday in most parts of Canada which suggests FX trading after lunch will be very quiet as the locals get an early start on the weekend.

USDCAD Technical outlook:

The intraday USDCAD technicals are bullish after the break above 1.2590 looking for a move through 1.2640 to extend gains to 1.2690.  A move below 1.2590 suggests some 1.2540-1.2640 consolidation.

Today’s Range 1.2570-1.2640

Chart: USDCAD 4 hour