April 9, 2020

USDCAD open (6:00 am EST) 1.4045-49    Overnight Range 1.4002-1.4076

  • Canada loses over 1 million jobs-Unemployment rate jumps to 7.8%
  • US Jobless claims for week ending April 3, surge to 6.6 million
  • Opec/Russia meeting results due today-Trump hints at oil tariffs
  • US dollar opens modestly softer except against CAD.  

Chart: Currency gain/loss (%) against the US dollar from NY close to 5:30 am PDT)

Source: Saxo Bank/IFXA

FX Recap and outlook:  The Canadian employment report and the US weekly jobless claims data exceeded the hype.  They were even worse than predicted.  The USD dollar reacted to the jobless claims numbers and traded lower. USDCAD dropped on the back of the broad US dollar move as the Canadian employment report was dismissed as stale.

The Easter Bunny has been declared an essential service. Markets are gearing up for a four day weekend, which suggests a very busy Thursday.  Traders are looking ahead to a speech by Fed Chair Jerome Powell at 10:00 am, and the Opec/Russia meeting results.

The US has over 430,000 confirmed COVID-19 cases and the death toll surged again, yesterday bringing the total US deaths to 14,768.  UK and French officials are reportedly considering extensions to mandatory lockdowns, while Italy’s Prime Minister said lockdown measures might begin to ease by the end of April.

The FOMC minutes for the March 2 and March 15 meetings were released yesterday.  They confirmed what markets already new-the Fed was spooked by the sharper-than-expected drop in economic activity.  More evidence of a slowing US economy will be evident today when the weekly jobless claims data is released.

EURUSD chopped about in a narrow (in these COVID-19 times) 1.0842-87range overnight and opened near the top of the range in NY.  Prices are underpinned, slightly by hopes that the EU Finance Ministers may agree on a stimulus package to support the Eurozone due to the COVID-19 outbreak.

GBPUSD traded sideways in Asia and then rallied from 1.2363 at the European open to 1.2447 in NY.  UK Feb. GDP (actual -0.1 vs forecast 0.1% m/m) showed the economy was shrinking before the pandemic hit.

USDJPY traded quietly in a 109.06-109.05 range, in part because 10-year US Treasury yields drifted in a 0.732%-00.759% band.

AUDUSD and NZDUSD are poised to finish the week at the top of this week’s ranges.  Prices support stems from firmer commodity prices and the earlier news that China lifted the lockdown in Wuhan. 

WTI oil rallied hard after bottoming out at $23.80 yesterday when the EIA reported US crude inventories surged by 15.1 million barrels, last week.  WTI is trading at $26.39 in NY, on hopes that Opec and Russia will agree to production cuts.  President Trump floated a trial balloon yesterday, suggesting he could impose tariffs on oil imports as a way of supporting the oil market.  No news is bad news.

USDCAD continues to track broad US dollar sentiment and is mirroring EURUSD moves  while traders bide their until there is news from the Opec/Russia meeting.

Fed Chair Jerome Powell’s may shed some light on the Fed’s outlook, but unless he announces a cure for COVID-19, he has already done what he can to support markets.

USDCAD technical outlook:

 The USDCAD technicals are bearish while prices are below 1.4160, looking for a break below 1.3920 to extend losses to 1.3750, and then 1.3670.  A move above 1.4180 shifts the focus to 1.4340 and then 1.4560.  For today, USDCAD support is at 1.3980 and 1.3920.  Resistance is at 1.4080, and 1.4160.  Today’s Range 1.3980-1.4180

Chart: USDCAD daily

Source: Saxo Bank