- US NFP data downgrades recession risk
- Global stock markets on defensive
- US dollar in demand at NY open. CAD outperforms.
USDCAD Snapshot open 1.3003-07, overnight range 1.2944-1.3007, close 1.2938, WTI oil $102.33, Gold
$1735.05
The Canadian dollar opened virtually unchanged from where it opened last Thursday. It is an impressive
feat considering the headline Canadian employment number was weak while the US number surprised
to the upside.
Many Canadian traders were unaware of the news.
That’s because Rogers Corporation Inc, the internet and mobility provider to over 11 million Canadian’s
crashed its network, and it was the second major outage by the company in fourteen months.
USDCAD has traded in a 1.2500-1.3080 range for a few months and has remained inside that band since
Friday.
US recession fears eased after the US employment report.
Nonfarm payrolls rose 372,000 in June, while the unemployment rate remained at 3.6%. Economists
opined that it is hard to have a recession in a booming job market.
The recession talk knocked oil prices lower, but WTI has recovered those losses and traded in a
$101.72/barrel-$105.01/b range.
Crude prices are supported by fears that demand will continue to outpace supply due to the Russia and
Ukraine war.
However, another Covid outbreak in China capped gains.
Nevertheless, the WTI downside should be limited.
The Russia and Ukraine war is still going strong, and Western governments will not remove sanctions on
Russian crude .
Russia is one of the top three oil producing countries and losing a sizable portion of its oil production
ensures WTI prices will remain elevated. Furthermore, Opec is unable to increase production to offset
Russian losses.
Economists at JPMorgan noted that a 3 million barrel/day reduction in Russian oil exports would lift
Brent (the European crude benchmark price) to $190.00/b. If so, the JPM models suggests Western
Europe and the US would have a recession.
The US dollar is in demand to start the week.
EURUSD broke below 1.0100, suggesting a test of 1.0000 is inevitable, while political nonsense in the UK
is driving GBPUSD lower.
USDJPY is trading at a 24-year high. The BoJ continues to reaffirm its dovish monetary policy stance even
as central banks worldwide are hiking rates.
AUDUSD and NZDUSD traded defensively due to lower commodity prices.
The Canadian and US economic calendars are empty.