Canadian Dollar Update June 10, 2019 – Canadian Dollar on a roll
USD/CAD Open: 1.3268-1.3269 Overnight Range: 1.3236-1.3281
The Canadian dollar was rangebound in overnight currency exchange markets. Oil is at $53.96 and gold is at $1,333. US markets are higher today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.3302. Support is at 1.3231.
The Canadian dollar is on a roll. USDCAD plunged to 1.3228 overnight from 1.3565 at the end of May, a 2.5% gain. What makes that gain so impressive is that it occurred even though West Texas Intermediate oil prices dropped about 15%.
The Canadian dollar had a big day on Friday, thanks to US and Canadian employment reports. The US nonfarm payrolls data (NFP) was far weaker than expected, while the Canadian data was stellar. The soft US data lowered the three-month trend to 151,000 compared to 198,000 previously. Traders concluded that if this weak data is supported by other weak reports, the Fed will cut interest rates. The CME Fedwatch tool suggests the probability of a rate cut at the July 31 meeting is 67%.
Canada gained 27,700 jobs in May, easily beating the forecast of 8,000 and that news combined with the US data sent the Canadian dollar soaring. However, the details were a tad less robust. Sixty-one thousand of the new jobs were in the self-employed category. Self-employed is how many recently unemployed workers describe themselves as they seek gainful employment.
The US dollar closed on Friday with losses against the G-10 majors. It managed to recoup some of those losses in overnight trading and opened in Toronto on a mixed, to firm note. The Mexican Peso, Canadian, Australian, and New Zealand dollars gapped lower at the Asia open following the news that the US cancelled planned tariffs on Mexico imports that were to go into effect today. The American’s appear satisfied with Mexico’s efforts to address some of the immigration concerns. However, with Trump, a deal is never a deal. He tweeted words to that effect on Sunday saying “There is now going to be great cooperation between Mexico & the USA, something that didn’t exist for decades. However, if for some unknown reason... .....there is not, we can always go back to our previous, very profitable, position of Tariffs”.
The Canadian dollar gains in early Asia quickly evaporated as a surge in USDJPY sparked broad US dollar demand. USDJPY rose as risk aversion trades were unwound after the Mexico news and due to a rally in US Treasury yields.
Several European countries were closed today for Whit Monday holidays. Those that were open joined Asia in buying US dollars. EURUSD dropped to 1.1292 from 1.1330 and is hovering around 1.1300 in early trading. Traders are bearish following a Reuters story saying “policymakers are open to cutting the ECB’s policy rate again if economic growth weakens in the rest of the year and a strong euro hurts a bloc already bearing the brunt of a global trade war”.
GBPUSD sellers emerged after a series of weaker than expected economic reports underscored the impact of Brexit on the UK economy.
US JOLTS survey and Canadian Housing Starts are the only data of note today.
Today’s Suggested Range USD/CAD: 1.3220 – 1.3320
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