November 1, 2019

USDCAD open 1.3165-69 (6:00 am EDT)    Overnight Range 1.343-1.3171

US Nonfarm payrolls rose 128,000 in October, well above the 80,000 forecast.  Even better, 95,000 jobs were added to the combined totals for the August and September reports.   On Wednesday, Fed Chair Jerome Powell said, “the economy is in a good place.”  The NFP data says he may be right.  The US dollar was mixed following the report. CAD, EUR, JPY and CHF were lower, NZD ticked higher and GBP and AUD were unchanged.

Overnight, FX markets were undecided. Dollar sellers were evident in Asia, following better than expected China Manufacturing PMI data, but they were replaced by dollar buyers in Europe.  The net result is that the greenback opened in New York, basically unchanged compared to Thursday’s closing levels.

FX Market Snapshot

Change in currency value against the US dollar from NY open to NY close 

Asia FX markets were buoyed when Caixin China Manufacturing PMI came in a 51.7, the best level seen in 2 years, supported by an increase in new export orders. AUDUSD and NZDUSD rallied on the news. AUDUSD climbed to 0.6910 from 0.6886. Australia PPI rose 0.4% q/q, which was unchanged from the previous report.

USDJPY barely budged. Japan PPI, employment data, and a small dip in the Nikkei couldn’t spark any interest as US 10-year Treasury yields languished at one-week lows.

EURUSD reversed Asia gains and traded lower in Europe. There wasn’t any Eurozone data of note, leaving traders twiddling their thumbs until the US NFP data is available. GBPUSD was directionless as it continued to consolidate this week’s gains.

USDCAD is consolidating its gains following the Bank of Canada and FOMC meetings. The somewhat dovish BoC policy shift combined with hawkish FOMC switch triggered a steep rally and caught USDCAD bears hibernating. The currency pair will be at the mercy of broad US dollar sentiment due to a lack of domestic data.

Arguably, markets are back to watching US/China trade developments. GBPUSD traders should get a bit of a break of volatility as the UK election takes center stage and Brexit gets pushed into January.

US ISM October Manufacturing PMI is forecast to be unchanged from September’s 51.5 result. Fed Vice Chair Richard Clarida and FOMC member Randal Quarles are speaking today.

 USDCAD Technical View

The intraday USDCAD technicals are bullish with a minor uptrend line coming into play at 1.3130 (hourly chart), which is guarded by support at 1.3140. A break above 1.3190 targets further gains to 1.3240. A break below 1.313 negates the bullish outlook and argues for 1.3040-1.3140 consolidation. For today, USDCAD support is at 1.3130 and 1.3110. Resistance is 1.3190 and 1.3240. Today’s Range 1.3110-1.3190

Chart: USDCAD 1 hour

Source: Saxo Bank