Canadian Dollar Update, July 2, 2020 – Canadian Dollar gains lag G-10 major currencies
USD/CAD Open: 1.3590-94, Overnight Range: 1.3560-1.3624
WTI Oil is at $39.93 and gold is at $1,787.30. US markets are higher today.
For today, USD resistance is at 1.3699. Support is at 1.3503.
• US nonfarm payrolls forecast to increase 3.0 million
• US giving back month-end gains
• Risk sentiment turns positive on COVID-19 vaccine hopes
The US employment report is released today due to Friday’s July 4th holiday. The consensus forecast is for nonfarm payrolls to increase by 3 million. There is a risk that the results could be higher than expected due to complications around how state unemployment assistance plans may have prevented laid-off employees being counted in the NFP survey.
The results are likely to be overshadowed by recent US coronavirus developments. Wednesday, America reported a daily record of 52,743 new coronavirus cases, forcing governors in six states to re-close bars, restaurants, and other services that have just reopened. However, reports of a potential coronavirus vaccine stoked risk sentiment.
Yesterday’s congressional testimony by Fed Chair Jerome Powell proved to be a non-event for traders. He didn’t offer any new insight into future monetary policy while repeating that plenty of downside risks remained. Later, the FOMC minutes from the June 10 meeting were released. The minutes showed the FOMC members were content to keep rates unchanged until 2022, and will maintain accommodative monetary policy.
Traders are focused on bullish USDCAD technicals, more than a recent jump in oil prices.
In Asia, positive risk sentiment lifted equity markets, as well as AUDUSD and NZDUSD. AUDUSD rebounded from a low of 0.6835 on Tuesday to 0.6935 in early Toronto trading. NZDUSD traded similarly with both currencies boosted by a jump in China Manufacturing PMI data.
EURUSD bottomed out at 1.1190 in NY yesterday morning, and climbed steadily, closing at 1.1251. Price action was steady in Asia. Better than expected Eurozone unemployment news, improving Producer Price data, combined with Wednesday’s better than expected Eurozone and German PMI reports, fueled the gains.
GBPUSD climbed steadily, rising from 1.2260 Tuesday to 1.2526 just before NY opened today.
Today’s US data includes NFP, Initial Jobless Claims, and Factory Orders. Canada Trade data is also on tap.
Today’s Suggested Range USD/CAD: 1.3540 – 1.3640