The US nonfarm payrolls report results were something of the turkey variety. Market chatter about a blow-out topside result proved to be just hot air. The consensus nonfarm payrolls forecast was for a gain of 185,000 jobs with many traders looking and position for an upside surprise. The surprise was the 134,000 new jobs number was even below the bottom range of consensus forecasts. Average hourly earnings rose 0.3% which was unchanged from August’s revised lower number. The spin masters are weaving a tale of data distortion from Hurricane Florence.
The result Canadian numbers were stellar. How the gain was achieved was ugly. Canada added 63,300 jobs, crushing the consensus forecast for a gain of 25,000. Unfortunately, they were all part-time jobs. Full-time jobs shrank by 16,900. Another disappointment was the drop in average hourly wages. There was a silver lining. StatsCanada reported that, compared with September 2017, employment was up 222,000 or 1.2%, entirely the result of gains in full-time work (+224,000)
USDCAD traders were not sure what to do. The currency pair bopped and weaved within a 1.2892-1.2953 range and has settled in the 1.2910 area garnering additional support from news Canada posted a Trade Surplus of $0.53 billion in August.
EURUSD and GBPUSD dollar dipsy-doodled after the US numbers, and both are trading with a bullish bias but are still well inside this week’s ranges. The weaker than expected NFP report gave AUDUSD and NZDUSD a boost as well.
Today’s twin employment reports are merely a minor speed-bump in the US and Canadian outlooks. The dip in NFP, will not have any impact on the Fed’s interest rate policy. The odds for a rate hike in October are still at 96.1%, just slightly lower than the 97.4% recorded yesterday.
The Bank of Canada is expected to raise rates in October and January which should cap USDCAD in the 1.2950-1.300 area.
Domestic market activity will taper quickly as market participants head for the door to get an early start on the Thanksgiving long weekend.
USDCAD Technical Outlook
The intraday USDCAD technicals are bullish above 1.2860 looking for a break of resistance in the 1.2940-50 area to extend gains to the 1.3000-10 area. A break below 1.2860 targets 1.2780 and 1.2740.
Todays Range 1.2870-1.2950