Canadian Dollar Update – Canadian dollar under pressure

• Trump announces candidates for Fed Chair
• Opec increases production
• US dollar trading defensively

USDCAD open 1.37950, overnight range 1.3790-1.3822, close, 1.3820, WTI 63.36

The Canadian dollar is consolidating Friday’s losses following extremely weak US and Canadian employment reports. Canada lost 106,000 jobs in July and August which more than erased the 83,000 jobs gained in June. In fact, Canada has lost 39,000 jobs year-to-date. That news arrived at the same time that the US employment report disappointed analysts, with just a 22,000 increase in new jobs in August.

Gold and oil prices are higher which is helping the Canadian dollar to grind out some gains. WTI oil prices climbed to 63.23 from 61.87, while gold (XAUUSD) made a new record high when it hit 3,621.92. Oil prices rose although Opec hiked production by 137,000 barrels/day due to fears of new sanctions against Iran and Russia. Gold climbed in part following news that China continues to add to its gold reserves.

Trump has already lined up possible replacements, with Fed Governor Christopher Waller, National Economic Council Director Kevin Hassett, and former Fed Governor Kevin Warsh identified as the short list.

Asian stock markets ended mostly higher, with Japan’s Topix gaining 1.06% and Hong Kong’s Hang Seng up 0.86%, while Australia’s ASX 200 slipped 0.24% on weak Chinese trade numbers.

As of 7:20 am EDT, Europe was in positive territory, with the German DAX climbing 0.55%, the French CAC 40 ahead 0.42%, and the UK FTSE 100 edging up 0.13%. S&P 500 futures added 0.24%. The US Dollar Index was weaker at 97.67 and the 10-year Treasury yield stood at 4.087%.

EURUSD traded in a 1.1704-1.1743 range as Friday’s rally stalled. Political instability in France, where the government is expected to lose a confidence vote, along with weaker investor sentiment (confidence index at -9.2 vs -3.7 in August), capped gains. German industrial production rose 1.3% as expected.

GBPUSD traded in a 1.3483-1.3526 range with a mild bullish tilt. Sterling’s moves remain dictated by US dollar sentiment due to a lack of actionable economic data this week.

USDJPY swung through a 147.47-148.58 range. The pair opened sharply higher in Asia, jumping from Friday’s 147.40 close to the session peak before sliding to 147.48 mid-morning in Europe, filling the gap. Political drama drove the volatility after Prime Minister Shigeru Ishiba announced his resignation, though he will stay on until a successor is chosen. The news overshadowed GDP data, which showed Q2 growth of 0.5% q/q, above the previous 0.3% reading.

AUDUSD held gains in a 0.6546-0.6589 range, shrugging off weak Chinese trade data. Traders instead focused on the risk of further US dollar softness after last Friday’s disappointing jobs report.

The US and Canadian economic calendars are empty.