Canadian Dollar Update – Canadian dollar blows up

• Canada, US and Japan markets closed Monday
• US dollar consolidating yesterdays gains.

USDCAD open 1.4019, overnight range 1.4013-1.4034, close, 1.4022, WTI 61.17, Gold 3995.17

The Canadian dollar dropped like a rock when support finally cratered. Traders sold the loonie aggressively as stop-loss orders were triggered and because of bleak outlook for economic growth and expectations for another soft Canadian employment report today.

Canada is expected to have added around 5,000 jobs after losing 65,500 in August, with the unemployment rate ticking up to 7.2 percent from 7.1 percent. The modest gain is unlikely to change the broader picture of a slowing labor market and may strengthen the case for another Bank of Canada rate cut.

Several Fed officials were busy talking yesterday, and the tone leaned dovish. Barr, Kashkari, and Daly all hinted that additional rate cuts are still on the table. They’re looking for more direction from the September CPI report, which could be released next week even with the government shutdown dragging on.

Asian markets booked profits to close out the week. Japan’s Topix fell 1.85 percent, Australia’s ASX 200 slipped 0.13 percent, and Hong Kong’s Hang Seng Index dropped 1.73 percent.

As of 7:20 a.m. EDT, European equities were flat. Germany’s DAX is down 0.12 percent, France’s CAC-40 is up 0.16% and the UK’s FTSE 100 flat. S&P 500 futures were steady, the U.S. Dollar Index sat at 99.34, and the 10-year Treasury yield held at 4.111 percent.

EURUSD traded in a 1.1554-1.1590 range and managed a modest gain after a week of losses. Political turmoil in France continues to weigh on sentiment, though speculation that President Macron could reappoint former Prime Minister Sébastien Lecornu offered mild support. Expectations for further Fed rate cuts while the ECB stands pat should keep downside limited to the 1.1520 area.

GBPUSD drifted between 1.3280-1.3315 and remained on the defensive ahead of November’s budget. A KPMG and REC report showed wage growth slowing to its weakest pace in more than four years, another sign that the labor market is losing momentum.

USDJPY held in a 152.39-153.27 band, consolidating recent gains. The yen briefly firmed in Asia after Komeito ended its 26-year coalition with the ruling LDP following Sanae Takaichi’s leadership victory. Japan’s Finance Minister warned about “excessive” currency moves, but traders largely ignored him. Japanese markets will be closed Monday.

AUDUSD hovered in a 0.6545-0.6573 range, steady after earlier weakness tied to broad U.S. dollar strength. RBA Governor Michele Bullock’s remarks that inflation is easing more slowly than expected helped temper losses and supported the case for keeping rates unchanged.