April 5, 2024

• NFP soars, adds 303,000 jobs, Unemployment rate falls to 3.8%.
• Canada loses 2,200 jobs while unemployment rate rises to 6.1%.
• US dollar jumps against all the majors in wake of hot NFP data.

FX at a Glance

Source: IFXA/RP

USDCAD Snapshot: open 1.3554-1.3558, overnight range 1.3546-1.3630, close 1.3543

USDCAD rallied yesterday after Middle East tensions escalated and then it took off again this morning after contrasting Canadian and US employment reports.

Canada lost 2,200 jobs in March while the unemployment rate rose to 6.1% from 5.8%.  The Canadian numbers are not that bad in the sense that all the losses were in the “self-employed” category.  The results were neither her no there or the Canadian dollar but the same cannot be said about the Loonie’s reaction to the US numbers.  USDCAD soared.

WTI oil reacted to the escalating Middle East tensions and climbed from $85.05 yesterday to $87.07 overnight. Traders ignored the US jobs data and WTI is sitting at $86.55.Some analysts have dusted off their $100.00/b predictions due to the Middle East hostilities, Opec production cuts, and rising fuel demand. 

USD/CAD Technicals

The intraday USDCAD technicals have flipped to bullish while above 1.3540 and the post-NFP rally is probing major support in the 1.3630 area.

Fibonacci retracement analysis of the November/December range suggests that a move above 1.3630 (61.8% Fibonacci) puts the 1.3750  (78.6% Fibonacci) level in play.

The uptrend line from the end of December, beginning of January is intact above 1.3490.

For today, USDCAD support is at 1.3560 and 1.3510. Resistance is at 1.3630 and 1.3710. Today’s range is 1.3570-1.3660

Chart: USDCAD daily

Source: DailyFX

Payrolls Powers Dollar

The US dollar soared on the heels of another “hotter-than-hot” US employment report. Nonfarm payrolls rose 303,000 in March, well above the forecast for a 200,000 increase while the unemployment rate ticked down to 3.8% from 3.9%. The results vindicate Fed Chair Powell and many of his colleagues who have been telling all who would listen that policymakers are in no hurry to cut interest rates.  Traders betting on a June rate cut pared back their bets from over 60% prior to the data to around 53% after.

The US dollar soared across the board, and the 10-year Treasury yield spiked to 4.40% from 4.33% pre-data.  US equity traders appear less concerned.  S&P 500 futures are up 0.29%.

It’s Not Just the Weather that’s Nasty.

April snowstorms, freezing temperatures, and gale-force winds have meant a nasty start to April. But it’s not just the weather. Iran is promising to retaliate against Israel after the Israeli Defense Force took out a couple of Iranian Generals who were likely liaisons (puppet masters) to Hamas. Israel warned that if Iran launches an attack from its soil against Israel, it will draw a strong response. By the way, Israel is a nuclear power. Those threats and counter-threats sparked a bit of risk-off trading yesterday.

Ms. Yellen Goes to Guangzhou

US Treasury Secretary Janet Yellen is visiting different cities in China to inform authorities that Uncle Sam is rather perturbed at China for flooding export markets with cheap, heavily subsidized manufacturing goods.

EURUSD

EURUSD dropped from 1.0848 to 1.0800 after the nonfarm payrolls number.  The US data suggests unchanged US rates for longer, while analysts expect the ECB to cut rates in June. German factory orders and Eurozone Retail sales data were non-factors for FX traders.

GBPUSD

GBPUSD plunged from 1.2645 to 1.2582, post-NFP.  The drop erased all the positive benefit from UK Construction Managers’ PMI data which was a tad better than expected. (actual 50.2, forecast 50, previous 49.7).

USDJPY

USDJPY traded in a 150.81-151.46 range overnight and then spiked to 151.75 after the US 10-year Treasury yield surged to 4.40% from 4.33%, pre-NFP. Traders continue to downplay verbal intervention from Finance and BoJ officials.  

AUDUSD and NZDUSD

AUDUSD traded in  0.6562-0.6593 range the dipped marginal to 0.6551 after the US data. Australia’s trade balance was  expected trade surplus narrowed more than expected.

NZDUSD consolidated yesterday’s move in a 0.6006-0.6031 range  the dropped to 0.5981 in NY.

USDMXN

USDMXN shrugged off the NFP data and traded defensively in a 16.4780-16.6110 range. The minutes of the Banxico March meeting suggest rates will be left unchanged at 11.00% at the May 9 meeting.

FX high, low, open (as of 6:00 am ET)

Source: Investing.com

China Snapshot

PBoC fix: 7.0949 vs exp. 7.2282 (prev. 7.0957).

Shanghai Shenzhen CLOSED

China is closed today and Friday for National holidays.

Chart: USDCNY and USDCNH 4 hour

Source: Investing.com