Overnight Range 1.3012-1.3076
FX traders expected a big jump in the headline US jobs report. They got it. Nonfarm payrolls gained 227,000 jobs in January, handily beating the 175,000 that was forecast. The US dollar should have surged. It didn’t. The devil was in the details and these details were a little on the soft side. The unemployment rate ticked up to 4.8% from 4.7% in December and average hourly earnings were at 0.1% vs. 0.2% forecast.
All in all, despite the modestly softer details, the US jobs report was strong and will keep the prospect for higher interest rates on the boil.
Overnight, the US dollar eked out small gains against most currency pairs in a low key session.
AUDUSD and NZDUSD eased following a drop in the China Caixin Manufacturing PMI report (Actual 51.0 vs. forecast 51.8)
The Peoples Bank of China (PBoC) raised rates on open market repos by 10 basis points which may be an attempt to limit USDCNY gains.
USDJPY was choppy. It dropped from 113.14 to 112.52 and then climbed back to 113.24. There were no shortages of comments from officials. The Prime Minister denied that there were plans for the GPIF to invest in US infrastructure. The Finance Minister said that Japans currency strategy is in accordance with the G20 agreement against competitive currency devaluations.
EURUSD inched lower all night and ignored higher Euro area services PMI data including a bump in Eurozone Services PMI to 53.7 from 53.6.
Sterling traders did not ignore the weaker than expected UK Services PMI. GBPUSD dropped from 1.2536 to 1.2476. It has fallen further since New York started
Oil prices chopped around in a $53.61-$54.02 range while tracking broad US dollar moves. Trump’s vague comments about Iran (“nothing is off the table”)
The Loonie was ignored. USDCAD meandered sideways in a narrow range, unable to break key support in the 1.2970-1.3000 area and unable to mount a sustained rally.
The rest of the day may see the US dollar may rally on the back of profit-taking ahead of the weekend. However, President Trump is meeting with “biggest” business leaders today and if he repeats his foreign currency valuation concerns, all bets are off.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish while prices are below 1.3060 and looking for a break below the uptrend line support at 1.2960 to extend losses to 1.2830. A break above 1.3060 would see a test of 1.3090 and then 1.3170. For today, USDCAD support is at 1.2990 and 1.2960. Resistance is at 1.3060 and 1.3110
Today’s Range 1.3010-1.3110
Chart: USDCAD daily
This mornings US NFP data drove USDMXN below minor support at 20.5015 and it spiked down to 20.3550 opening the door to further losses to 20.0945, representing the 50% retracement level of the post-Trump election range. A break above 20.6250 will extend gains to 20.8510
Chart: USDMXN 30 minute
Source: Saxo Bank