Canadian Dollar Update – Canadian dollar buoyed by jobs data
USD/CAD Open: 1.3286-90, Overnight Range: 1.3274-1.3301, Previous Close: 1.3277
WTI Oil open at $73.49 and gold open at $1,923.41. US markets are higher today.
For today, USD resistance is at 1.3287. Support is at 1.3274.
- Canadian dollar consolidating gains after robust jobs data.
- BoC monetary Policy decision Wednesday.
- US dollar trading defensively.
The Canadian dollar is starting the week as the second-best performing G-10 currency since Friday’s NY open. The Canadian dollar gains came on the heels of weaker-than-expected US nonfarm payrolls data and stronger than expect Canadian employment numbers.
Canada saw a net increase of 59,900 jobs due to a surge in full-time employment (100,000). The participation rate also experienced growth, reaching 65.7% compared to the previous 65.5%. However, the unemployment rate slightly increased from 5.2% to 5.4%.
More importantly, the US nonfarm payrolls report was weaker than expected. June NFP rose 209,000 compared to the forecast for a 225,000 gain. By itself, the results were not that bad, but traders were long US dollars due to anticipation a sharply higher NFP number. That’s because Thursday’s ADP data was well above expectations (actual 497,000) compared to the consensus forecast of 228,000.
USDCAD fell to 1.3265 from 1.3385 on Friday and consolidated those losses in a 1.3275-1.3301 range overnight.
The focus has shifted to Wednesday’s Bank of Canada interest rate decision and the release of the quarterly Monetary Policy Report (MPR).
The employment data all but confirmed that the BoC will raise rates again, which would bring the benchmark rate to 5.0%.
However, it may not be all smooth sailing for the Canadian dollar The British Columbia port strike could make a serious dent in Canada’s Q3 growth while fueling an inflation spike, if it is allowed to continue for any length of time. Traders would have to decide if the prospect of even higher interest rates would be more important than the risk of an economy going off the rails.
EURUSD traded in a 1.0947-1.0973 range, consolidating its gains from Friday. Further gains may be a struggle ahead of Wednesday’s US inflation gain and the risk of hawkish rhetoric from Fed policymakers.
GBPUSD opened firm in Asia then slid steadily lower, falling from 1.2840 to 1.2789 in early NY, mainly due to profit-taking ahead of Tuesday’s UK employment report.
USDJPY chopped about in a 142.13-143.00 range torn between safe haven demand for yen pressuring the downside and steady to firm US treasury yields with the 10-year yield at 4.058% in NY.
AUDUSD is the second-worst performing G-10 currency (CHF is the worst) and is down 0.3% even as the other commodity currencies rallied. AUDUSD traded negatively in a 0.6634-0.6695 range due to the RBA decision to leave interest rates unchanged while the Fed is expected to hike twice more before yearend.
There are no top tier US or Canadian economic reports today.