USDCAD Range 1.3168-1.3240
USDCAD sank and soared in another wild employment report Friday. The Canadian jobs report beat expectations and posted a gain of 12,000 jobs vs. forecast for a loss of 4,500. USDCAD plunged to 1.3170 from 1.3230 on the news. That move didn’t last.
The US nonfarm payrolls report was worse than expected, posting a gain of 185,000 jobs instead of the forecasted 225,000 rise. After a brief flurry of to-ing and fro-ing, analysts quickly concluded that the report did nothing to dampen expectations for a September Fed rate hike and the US dollar caught a bid. It helped that Richmond Fed President, Jeffrey Lacker, spoke prior to the data and stated that “a weak August report would just be a blip and ignored”, or words to that effect.
The overnight session was fairly tame. FX traders stayed pretty close to home, content to digest the implications of yesterday’s European Central Bank meeting and the prospect of additional stimulus. The Japanese Yen was the big mover. USDJPY declined to a low of 118.88 from the New York closing level of 120.18, on another weak equity market performance.
The G-20 Finance Ministers meeting begins today in Ankara, Turkey and they have already leaked a draft “communique”, according to Bloomberg. That begs the question” Why have the meeting if you already have determined the result?
FX trading activity should rapidly diminish as we near the New York lunch hour and traders start heading for the exits to get an early start on the Canadian and US Labour Day long weekend.
USDCAD has been locked in a 1.3100-1.3350 range for the best two weeks and the current price of 1.3220 is almost in the exact middle of that range indicating a fairly indecisive market. However, the underlying uptrend from the end of June remains firmly entrenched and maintains the bullish US dollar bias. A break of 1.3100 suggests further losses to the 1.2950-1.3100 support zone while a break above 1.3350 targets resistance at 1.3450.
Today’s Range 1.3210-1.3290
Chart: USDCAD 4 hour with current trading band