USDCAD soared, rising from 1.2590 to a spike high of 1.2686 when Canadian employment data was released.  At first glance it was ugly. The headline recorded a drop of 88,000 jobs in January.  On closer look, the decline was all part-time. (-137,000)  Full-time grew by 49,000.  On a year-over-year basis, employment grew by 289,000, or 24,983 per month.  All in all, not a bad report.

The post-payrolls spike has fully reversed.  USDCAD is trading at 1.2590, as of 1353 GMT.

Overnight, financial markets were nervous.  Asia equity market indices followed Wall Street into the sewer.  The Nikkei 225 dropped 2.32%, and the Hang Seng sank 3.10%.  FX markets didn’t get very excited about the moves.  AUDUSD and NZDUSD traded sideways, and USDJPY rallied.

The US dollar opened in New York with minor deviances from Thursday’s closing levels.  The commodity currency bloc and Euro had tiny gains, Sterling was flat, and the Japanese yen and Swiss franc declined.

Sterling provided the entertainment (and volatility) in Europe.  GBPUSD drifted higher from the Asia low of 1.3898 and peaked at 1.3986.Prices were supported by comments from Bank of England Deputy Governor Ben Broadbent. He said, “But nor do I think if there were to be a couple of 25 basis point rises in a year, that that would somehow be a great shock.”  The rally was reversed after UK Industrial Production (Actual-1.3% vs forecast -0.9% and Trade data were worse than forecast.  GBPUSD tumbled to 1.3793 in New York trading before ticking higher.

EURUSD bounced in a 1.2241-1.2286 range.  Traders remain concerned about further US equity market weakness triggering a fresh bout of US dollar demand.

Oil prices were flat, but they have a negative bias  WTI oil dropped from $65.38/b on Monday to $60.40/b this morning. Increasing US production and rising inventories are behind the move. Reuters reported that the US produces more oil than Saudi Arabia and will soon surpass Russia.   US exports to China (which didn’t exist before 2016) are giving Opec a run for their money.

There isn’t any US data of note, leaving traders to seek direction from Wall Street.  At the moment, US equity futures are flat.

USDCAD Technical outlook:

The intraday USDCAD technicals are bullish while prices are trading above 1.2580. This mornings break of resistance in the 1.2630-60 area can be written off- as a data spike anomaly, especially since prices retreated just as quickly. USDCAD needs to  break below 1.2580  for a test of support at 1.2500. Rallies should be capped at 1.2660.   Longer term, the weekly chart show the downtrend from April 2017 is still intact while prices are below 1.2760 with support at 1.2060.

Today’s Range 1.2550-1.2650