Picture: Pixabay

June 4, 2021

NFP misses the mark, again

Canada loses 68,000 jobs

US dollar opens higher against G-10 majors, compared to yesterday’s open

USDCAD open 1.2121-25, Overnight range 1.2106-1.2128,  Previous  close 1.2110

FX at a Glance-24 hours

FX Recap and outlook

Canada lost 68,000 jobs in May, but 54,000 were just part-time.  The results were far weaker than the consensus forecast for a loss of 20,000 jobs.  The losses were all due to new lockdown measures and restrictions from the third-wave coronavirus outbreak.  Those restrictions are being eased which suggests a substantial rebound in the June numbers.

The US nonfarm payrolls (NFP)report was hugely disappointing for those expecting gains similar to the ADP  results (978,000) yesterday.  NFP climbed 559,000 in May which is a decent result except when forecasters are looking for a 650,000 increase.  The US dollar retreated on the results.

US equity futures rallied following the NFP results and now point to a positive open on Wall Street.   European bourses are flipped from slightly negative to slightly positive after the US data.  Gold prices bounced from $1870.00 to $1883.00 while WTI oil prices stayed steady at $69.25/b.  10-year US Treasury yields tick are flat at !.62%.

EURUSD is recovering some of yesterday’s losses and rallied to 1.2165 post-NFP, from a pre-data level of 1.2107.  Eurozone April Retail Sales data for April were  -3.1% m/m compared to 3.3% in March. 

GBPUSD soared to 1.4184 from an overnight low of 1.4084.  The gains were fueled by better than expected UK Construction PMI data  in May (actual 64.2 vs 61.6), and by the US dollar retreat after the employment news.

USDJPY rallied from 109.60 yesterday to 110.31 in Asia then retraced the entire move in a profit-taking plunge following the NFP data.  

AUDUSD and NZDUSD rallied on renewed US dollar weakness.  AUSD climbed from an overnight low of 0.7653 to 0.7717 in NY, but the earlier break below 0.7700 leaves a negative bias.

USDCAD rallied due to widespread US dollar demand vs the majors and in anticipation of a weak Canadian Labour Force Survey (LFS).  When it didn’t happen, prices retreated, leaving USDCAD with a bearish bias.  That’s because the Bank of Canada, the OECD, and most economists expect a robust domestic economic rebound in H2.  Rising WTI oil prices, which are within spitting distance of $70.00/barrel, continue to undermine USDCAD.

Canada Ivey Purchasing Managers Index is still ahead.

USDCAD technical outlook

The USDCAD technicals are bearish below 1.2140, with a break below 1.2080 putting 1.2000 back into play.   For today, USDCAD support is at 1.2080 and 1.2040.  Resistance is at 1.2140 and 1.2190   Today’s range 1.2060-1.2140

Chart USDCAD 4 hour

Source: Saxo Bank

FX open, high, low, previous close

Source: Saxo Bank