Canadian and American employment reports were released this morning. Both reports beat forecasts. US Nonfarm payrolls grew by 250,000, well above the 190,000 that was predicted. Average Hourly earnings at 0.2% and the unemployment rate of 3.7% were as expected. Canada only added 11,200 jobs but that beat the 10,000 estimate. The unemployment rate dipped to 5.8% from 5.9%.
The US dollar firmed on the news. USDCAD rallied from a pre-data low of 1.3051 to 1.3107. EURUSD, and GBPUSD dipped but that move is already being reversed. FX markets are vulnerable to a profit-taking, pre-weekend US dollar rally which may be triggered if Wall Street slides.
The US dollar added to yesterday’s losses and opened down across the board in New York, except against the Japanese yen which was unchanged. The Australian was the best performing currency helped by solid economic reports.
In Asia, risk sentiment improved.President Trump reached out to China President Xi Jinping yesterday. Afterwards, he reportedly instructed staff to prepare a trade deal that could be announced at the end of November G-20 meeting in Argentina.
Asia equity markets soared, USDCNY sank, and spirits were lifted in global financial centres.
There was more good news. The US said that eight countries would receive waivers to continue buying Iran oil without fear of US sanctions. The four major nations are China, India, Japan, and South Korea. WTI oil plunged from $65.37/barrel yesterday to $63.28/b to today. US Secretary of State Pompeo and Treasury Secretary Mnuchin will hold a briefing on the Iran sanctions at 7:15 PDT, today
EURUSD broke above minor resistance at 1.1420 and touched 1.1454 in early New York trading. A decisive break above 1.1460 targets 1.1530. Traders ignored the modestly softer Eurozone Manufacturing PMI data. (Actual 52.0 vs forecast 52.1)
Sterling is aggressively squeezing short positions. Yesterday’s positive Brexit chatter suggesting that a deal had been reached on financial services and another report saying a deal could be in place by November 21, underpinned the currency. GBPUSD rallied from 1.2698 on October 30 to 1.3039 in Europe. Prices got an added boost from a rise in UK Construction PMI to 53.2 from 52.1 in September.
USDJPY chopped about in a 112.57-113.09 range supported by the improved risk tone and firm US Treasury yields and is near the top of the range after NFP.
USDCAD topped out at 1.3166 on Wednesday in a rally fueled by month-end portfolio rebalancing demand. Since then, prices have traded lower with the break of support in the 13110 area accelerating sales. Additional gains may be limited because of the free-falling oil prices.
The intraday USDCAD technicals are bearish while prices are below 1.3110, looking for a break of 1.3040 to extend losses to 1.2930 which is the 61.8% Fibonacci retracement level of the October range. A break above 1.3110 shifts the focus to 1.3190 For today, USDCAD support is at 1.3040, and 1.3020. Resistance is at 1.3110 and 1.3180..
Today’s Range 1.3060-1.3140