Canadian Dollar Update December 9, 2019 – Canadian Dollar sank by US and Canada employment data
USD/CAD Open: 1.3251-1.3252, Overnight Range: 1.3230-1.3265
Oil is at $59.01 and gold is at $1,466.20. US markets are mixed today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3271. Support is at 1.3207.
The Canadian dollar was torpedoed on Friday. A surprisingly robust US nonfarm payrolls report combined with an extremely poor Canadian Labour Force survey blew the Canadian dollar out of the water.
Canada lost 71,200 jobs in November. Even worse, the unemployment rate soared to 5.9% from 5.5% in October. Some analysts suggested that the two consecutive soft employment reports will knock the Bank of Canada off its “steady” interest rate policy perch and lead to a rate cut in January. Other analysts scoff at the idea, saying that the poor results are a continuation of the “noise” from the October election.
The US data is further validation for Fed Chair Jerome Powell and his colleagues who have adopted a “wait and see” approach to monetary policy. Mr. Powell said the US economy was in a good place and that the glass was more than “half-full.” The jobs data helps to ensure that Wednesday’s Federal Open Market Committee (FOMC) meeting results will be unchanged interest rates and therefore, a non-event.
FX markets got off to a mildly risk-averse start in Asia thanks to weaker than expected China trade data. China’s trade surplus narrowed sharply in November, led by a 1.1% y/y drop in exports. AUDUSD bore the brunt of the bad news and gave back all of Friday’s gains.
The lack of progress in the ongoing US/China trade talks was another negative factor. Hopes for a Phase 1 deal before the US raises tariffs again on December 15 are fading. US officials said that a deal was close but added there were no plans for a face-to-face meeting with trade negotiators.
The risk aversion fears pressured USDJPY, which fell from 108.65 to 108.44 when Toronto opened today. Lower US Treasury yields and higher oil prices were other factors weighing on the currency pair.
The British pound was the best performing G-10 major currency compared to the G-10 major currencies. GBPUSD climbed to 1.3180 from 1.3129 on the strength of a series of US election polls.
The only data available today is Canadian Housing Starts which won’t have an impact on trading.
Today’s Suggested Range USD/CAD: 1.3200 – 1.3300