- Nonfarm payrolls forecast 200,000 Canada jobs 10,000
- Global risk sentiment improves slightly
- US dollar trading defensively ahead of jobs data
USDCAD snapshot open 1.3646-50, overnight range 1.3631-1.3749, close 1.3746, WTI $90.42, Gold $1645.81
The Canadian dollar is enjoying a pre-employment report boost partly due to Chinese developments.
USDCAD is back to where it was before the FOMC statement and Powell’s press conference on Wednesday. The overnight USDCAD sell off is mainly due to position adjusting ahead of today’s twin US and Canadian employment reports, with a slightly better tone to risk sentiment due to rebounding Chinese stock markets.
Canada is expected to have gained 10,000 jobs in October. A weaker than expected result would support the recent BoC dovish rate hike as it may be seen as evidence of a slowing economy. Even so, it will be the US NFP data that drives USDCAD direction.
The Canadian dollar got a bit of additional support as WTI oil prices crossed the $90.0/barrel threshold for the first time since October 11.
Prices got a lift following rumours that China plans to ease covid restrictions, which paves the way for increased demand alongside the latest Opec production cuts will continue to support prices.
The US employment data will be the driver of FX moves today. The consensus forecast for NFP is 200,000 (September result 263,000), the unemployment rate to tick higher to 3.6% from 3.5% and average hourly earnings unchanged at 0.3% m/m. Traders are looking for evidence that the US economy is slowing, potentially helping to ease inflation pressures, and thereby forcing the Fed to tap the rate hike brakes.
EURUSD traded in a 0.9744-0.9796 range. Support from slightly better than expected Eurozone Services and Composite PMI reports was offset by weak German Factory orders data. The EURUSD technicals are bearish below 0.9860.
GBPUSD climbed from 1.1152 to 1.1248 in a profit-taking rally ahead of the US NFP data. Yesterday’s dovish Bank of England rate hike and dire recession warnings will limit gains. The technicals are bearish below 1.1370, looking for a test of support at 1.0950.
USDJPY dropped from 148.40 to 147.55 due to broad US dollar weakness. Traders ignored the steady but firm US 10-year yield of 4.152%.
AUDUSD firmed from 0.6287 to 0.6361 due to widespread US dollar weakness. The RBA Statement on Monetary Policy predicted additional rate hikes while downgrading growth forecasts.
Canada Ivey PMI data is also on tap.
