Canadian Dollar Update, October 8, 2021 – Canadian dollar awaiting US and Canadian jobs data
USD/CAD Open: 1.2539-43, Overnight Range: 1.2535-1.2561, Previous Close: 1.2553
WTI Oil is at $78.94 and gold is at $1,759.20. US markets are mixed today.
For today, USD resistance is at 1.2508. Support is at 1.2448.
• US debt ceiling pushed put to December 3
• Treasury yields soar ahead of US NFP
• Canadian dollar outperforms as oil prices rise
The Canadian dollar outperformed against its G-10 counterparts since Thursday’s open and is the best performing currency in the past 24 hours. A surge in West Texas Intermediate (WTI) oil prices from $75.30 on Thursday to $79.63 overnight fueled the Loonie gain.
A confluence of events is underpinning WTI prices. The lingering impact on supply from US storms combined with reports China told energy companies to “secure winter supplies at all costs,” natural gas shortages in Europe, and bullish price forecasts have combined to lift prices to levels last seen in November 2014.
Canada’s September employment report is expected to show 60,000 new jobs adding to the 415,000 gain over the past three months. A larger than expected increase will support the Canadian dollar but its overall direction will be determined by the US nonfarm payrolls (NFP) report.
NFP is forecast to rise 500,000, along with an increase in average hourly earnings, and a dip in the unemployment rate to 5.1%.
If so, analysts suggest it just about guarantees the Fed will begin tapering asset purchases in November. Those expectations have boosted the US dollar, Treasury yields, and undermined equities.
Overnight, FX markets took the news that the US government extended the debt ceiling until December 3, in stride. Equity traders, not so much. US stocks sold off aggressively as traders feared debt ceiling negotiations would fail, then rallied when reports of a deal surfaced. An agreement was announced last night but instead of rejoicing equity traders turned their focus to the jump in US 10-year yields and the implication of today’s US employment data on Fed tapering plans.
European bourses are trading mixed to flat, while US equity futures are almost unchanged in early NY trading. Oil and gold prices are modestly higher, and US 10-year Treasury yield has dipped from its overnight peak of 1.60% to 1.586%.
China returned from its 7-day Golden Week holiday and traders bought stocks. The benchmark Shanghai Shenzhen CSI 300 index rose 1.31%, supported by better than expected Caixin Services PMI data for September (actual 53.4, forecast, 50.7, previous 46.7). The results were due to a drop in COVID19 cases that boost confidence.
EURUSD and GBPUSD were range bound while USDJPY rallied due to higher 10-year Treasury yields.
Today’s Suggested Range USD/CAD: 1.2450 – 1.2550