Canadian Dollar Update, February 8, 2021 – Canadian dollar ignores domestic employment data
USD/CAD Open: 1.2776-80, Overnight Range: 1.2757-1.2780, Previous Close: 1.2760
WTI Oil is at $57.54 and gold is at $1,834.00. US markets are higher today.
For today, USD resistance is at 1.2771. Support is at 1.2728.
• Canadian dollar gets support from oil
• Rising US Treasury yields drive greenback demand
• US dollar opens with gains compared Friday’s close
The Canadian dollar rallied Friday despite Statistics Canada releasing a sharply weaker than expected employment report. Canada lost 212,800 jobs in January on top of 52,700 job losses in December. The losses were concentrated in the retail sectors in Ontario and Quebec, and blamed on stringent coronavirus lockdown measures.
February’s results are likely to be similar which suggests that a post-COVID-19 economic recovery will be delayed. The economic delay will be exacerbated as Canada’s coronavirus vaccination roll-out is stalled due to a shortage of vaccines.
US nonfarm payrolls rose a modest 49,000 in January, a vast improvement over the 227,000 job losses in December, and almost exactly as predicted. The details were fairly good with the unemployment rate dropping to 6.3% from 6,7%, while average hourly earnings rose 0.2%. Still, the results encouraged traders to book profits on short-USD positions.
On Friday, EURUSD traded in a 1.1953-1.1987 range until NY opened then accelerated to close at 1.2049, following the US employment data. The results encouraged traders to book profits ahead of the weekend. The single currency retreated overnight and opened in Toronto at the overnight low of 1.2020. EURUSD sentiment continues to be bearish due to expectations the EU economic recovery will lag that of the US. Expectations for another round of US stimulus is also weighing on prices.
GBPUSD found a top in Asia at 1.3740, then dropped sharply to 1.3684 in early NY trading, due to broad US dollar strength. The downside may be limited in part because of the somewhat bullish Bank of England outlook, last week, and bearish EURGBP technicals.
Global equity indexes, and Wall Street futures are higher as are gold and oil prices. The prospect of a massive US stimulus package continues to underpin prices, and stoke risk appetite.
West Texas Intermediate oil climbed to $57.65/b after closing at $57.09/b. Traders are bullish due to the large US crude inventory drawdowns seen last week, and the on-going OPEC and Saudi Arabia production cuts.
There are not any US and Canadian economic data on tap today.
Today’s Suggested Range USD/CAD: 1.2730 – 1.2830