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Canadian Dollar Update July 5, 2019 – Canadian Dollar sidelined ahead of employment data

USD/CAD Open: 1.3118-1.3119 Overnight Range: 1.3043-1.3129

Oil is at $57.27 and gold is at $1,393. US markets are lower today.

The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3212. Support is at 1.2981.

The Canadian dollar traded a tad softer in an uneventful overnight session. The lack of FX follow-through in Asia due to Thursday’s US Independence Day holiday and the countdown until today’s US and Canadian employment reports sidelined traders.

FX traders are expecting today’s US nonfarm payrolls report to rebound to 160,000 jobs from the disappointing 75,000 increase in May. Average hourly earnings are expected to tick higher to 3.2% from 3.1% while the unemployment rate stays unchanged at 3.6%. Some analysts believe that if jobs data is weaker than expected, it would support calls for the Fed to cut interest rates.

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The US dollar opened in New York with small gains across the board, compared to Wednesday’s New York closing levels. The New Zealand dollar gave up the most ground against the greenback. Prices were pressured by a combination of RBNZ rate cut expectations and the lack of progress with the US/China trade talks. AUDUSD popped on reports of the government’s tax cut plans, but they weren’t sustained.

USDJPY flat-lined in Asia and then rallied in Europe on the back of broad US dollar demand ahead of the expected robust NFP data today. Soft US Treasury market yields capped gains.

EURUSD continued to trade with a negative bias. Prices are weighed down by the dovish ECB outlook, IMF’s Christine Lagarde’s ECB President nomination, and today’s German data didn’t help sentiment. German Factory orders fell 2.2% in May, compared to a 0.4% gain in April. EURUSD technicals suggest that a decisive breach of support in the 1.1250-60 area will extend losses to 1.1140.

GBPUSD is soft on the back of weak domestic data and the on-going Brexit drama which could force the Bank of England to cut interest rates at a later date.

West Texas Intermediate oil prices have bounced erratically inside a $56.32/barrel-$57.54 range. Yesterday’s news that the UK seized an Iranian oil tanker near Gibraltar triggered gains, and Iran’s threat to scoop a British tanker in response has underpinned prices above $56.90. Nevertheless, the risk of supply disruption was not enough to counter fears of weakening demand if the ongoing US/China trade dispute leads to a further slowdown in global growth.

Canadian dollar traders ignored the oil price swings, preferring to track the broad dollar moves. Prices are undermined by forecasts for a soft domestic employment report. (Forecast 5,000 new jobs) However, the string of hefty gains in recent employment reports would negate the impact of soft data today.

Today’s Suggested Range USD/CAD: 1.3070-1.3170

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By KBFX | July 5, 2019 | Daily Update | 0 comments