Canadian Dollar Update, June 8, 2020 – Canadian Dollar looking for another catalyst
USD/CAD Open: 1.3407-05, Overnight Range: 1.3386-1.3436
WTI Oil is at $38.89 and gold is at $1,693.90. US markets are higher today.
For today, USD resistance is at 1.3433. Support is at 1.3376.
• Canadian dollar rally stalled despite OPEC deal and firm crude prices
• Friday’s robust Canada Labour Force Survey overshadowed by US employment report
• FX markets adrift ahead of FOMC meeting Wednesday
The Canadian dollar rally fizzled on Friday. The currency was unable to take advantage of a far-better-than-expected domestic employment report in part because even better US nonfarm payrolls data overshadowed the domestic results. Canada added a record 289,600 jobs in May, which looks terrific, but the gain is a mere drop in the bucket compared to the 3.0 million jobs that disappeared in March and April.
The US added 2.5 million jobs in May, which was much better than the consensus forecast for a loss of 8.0 million. The results were impressive, but the gains have a long way to go to recover the 22 million jobs that disappeared in the previous two months. However, the Bureau of Labour Statistics admitted a “miscalculation error” which led to the unemployment rate of 13.3% being understated by 3.0%. Nevertheless, the results gave hope to forecasts for a quick economic rebound.
Wall Street thought so. The Nasdaq climbed to a new record intraday high on Friday.
USDJPY was unable to hang on to Friday’s post-NFP gains as prices drifted gently lower overnight. Japan Q1 GDP fell 2.2% y/y, a tick lower than forecast. The small dip undermined prices in US Treasury yields.
The Canadian dollar failed to derive much support following the OPEC and OPEC + friends’ announcement that they agreed to extend the 9.7 million barrels per day production cuts until August 1. Oil prices inched higher but not the Canadian dollar. Canadian crude is trading at a $9.62 discount to WTI, and even after the post-OPEC gains, WTI is well below February levels.
EURUSD traded in a 1.1269-1.1319 range, rallying in Asia and retreating in Europe after weak German Industrial Production. The price action is likely because of position adjusting ahead of Wednesday’s FOMC meeting. EURUSD continues to be supported by the slew of stimulus measures announced by the ECB, Germany, and EU.
The US and Canadian data calendars are empty, and Wednesday’s FOMC meeting provides traders with an excuse to remain on the sidelines.
Today’s Suggested Range USD/CAD: 1.3360– 1.3460