Overnight Range 1.3018-1.3112
USDCAD dropped from 1.3100 to 1.3020 immediately following the weaker-than-expected US nonfarm payrolls report with an improved Canadian Trade report greasing the skids.
Nonfarm payrolls increased 151,000 vs forecasts for a gain of 185,000. Average hourly earnings dipped while the unemployment rate was unchanged. This data opened up a can of worms. One camp believes that this employment report combined with yesterday’s weak ISM Manufacturing PMI data is enough to leave the Fed on hold, perhaps past December. The other camp views todays employment data as strong considering that the US is at or very close to full employment.
FX traders appeared to hibernate during the Asia session That changed in Europe. US dollars were bought, very timidly, but bought, nonetheless. They are probably regretting that decision now. GBPUSD rose on strong Construction PMIs and Eurozone PPI was slightly better than expected although it didn’t help EURUSD.
The weak US employment data and the greatly improved Canadian trade data will lead to extended USDCAD selling as short Canadian dollar positions get squeezed.
Today will be a fairly short day. Once the fun and games from the employment data are complete, traders in the US and Canada will be looking for the exits to get an early start on the last long weekend of the summer.
USDCAD technical outlook.
The intraday USDCAD technicals have flipped to bearish with the break of 1.3080 and then 1.3060 should lead to a test of support in the 1.2990-1.3000 area. If broken, next stop is 1.2940 A move above 1.3120 negates the downside pressure.
Today’s Range 1.2990-1.3080
Chart: USDCAD 1 hour