August 9, 2019
USDCAD Open (6:00 am EDT) 1.3223-26 Overnight Range 1.3211-72
The Canadian employment report was weaker than forecast. Statistics Canada fudged the wording in the Labour Force survey statement. Canada lost 24,200 jobs in July which they described as “little changed.” The employment rate rose 0.2% to 5.7%. The soft report was not unexpected as most economists suggested that the 34,700 average monthly gains since last September were not sustainable.
USDCAD drifted lower overnight and was resting at 1.3211 just before the report was released. Prices spiked to 1.3272 before drifting down to 1.3255 as of 8:45 am EDT. USDCAD may drift lower thanks to a shift in sentiment towards the Australian dollar.
AUDUSD has rallied nearly 2% since Wednesday when the Reserve Bank of Australia chopped interest rates 0.50%, supported by RBA Governor Philip Lowe’s comments. He spoke before the Australian House of Commons today. He said he thought the economy was a turning point, thanks to lower rates, lower currency and infrastructure spending. Even though he warned of downside risks from the US/China trade war and spoke of exploring unconventional stimulus measures,
Elsewhere, GBPUSD is getting spanked again. It fell from 1.2146 to 1.2081 in early New York trading. A host of UK economic reports were weaker than expected, including Q2 GDP. (Actual -0.2% vs forecast 0.0% and previous 0.5%) Traders are also unhappy with reports that Prime Minister Boris Johnson would allow the UK to leave the Eurozone without a deal on October 31 and then having an election on November 1
EURUSD traded in a narrow 1.1184-1.1206 range. Traders are wary about risks from another Italian election which 5-Star party leader Matteo Salvini is demanding. Modest negative risk sentiment is providing a bit of support.
USDJPY traded higher in Asia and then reversed the move during the European session. Prices are weighed down by lingering safe-haven demand and soft US Treasury yields. US 10-year yields dropped from 1.779 yesterday to 1..697% today.
WTI oil prices rose even though the International Energy Agency trimmed its forecast for global oil demand growth to 1.2 million bpd from 1.3 million bpd. They said the situation is more uncertain due to the China/US trade war and the risk is for further downward revisions to its forecasts.
There isn’t any US economic data of note on tap today.
USDCAD Technical Outlook
The intraday USDCAD technicals flipped to bearish with the break below 1.3240. The downside targets are the uptrend line from mid-July at 1.3170 and Fibonacci support at 1.3140 (May 30-July 18 range) For today, USDCAD support is at 1.3210 and 1.3170. Resistance is at 1.3260 and 1.3310. Today’s Range 1.3170-1.3260
Chart: USDCAD 4 hour
Source: Saxo Bank