USD/CAD Open: 1.3573-77, Overnight Range: 1.3571-1.3603, Previous Close: 1.3601
WTI Oil open at $70.49 and gold open at $2,029.84. US markets are higher today.
For today, USD resistance is at 1.3599. Support is at 1.3572.
The Canadian dollar is grinding out small gains due to negative pressure on the US dollar, stemming from speculation that the Fed will cut rates as early as March. The news had a limited impact on the Loonie because many Canadian bank economists think the Bank of Canada will cut rates in March as well.
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Yesterday, BoC Deputy Governor Toni Gravelle explained the decision to leave rates unchanged but did not offer anything new. He spoke a lot about immigration and claimed that bringing in 1 million new immigrants in one year wasn’t inflationary, although he acknowledged it exacerbates Canada’s housing crisis. It was unclear if he was reading from Liberal government speaking notes.
The BoC monetary policy statement warned that interest rates could still go higher if data warranted such a move, but analysts suggest that comment is merely to prevent markets from easing too rapidly.
But today’s focus is squarely on the US employment report. Traders may get a rude awakening this morning when the November nonfarm payrolls data is released. ING economists paint an interesting scenario for markets. They point out that 150,000 (which they suggest is the replacement rate – job leavers vs. new hires) is key. If NFP adds 190,000 jobs, it is because of the end of auto worker and Hollywood strikes. Without that bump, NFP will be bang on the replacement level.
Anything above 200,000 will be bad news for bond and equity bulls, along with US dollar bears, particularly those short USDJPY – at least until Wednesday’s FOMC meeting.
BoC Deputy Governor Toni Gravelle explained the decision to leave rates unchanged but did not offer anything new. He spoke a lot about immigration and claimed that bringing in 1 million new immigrants in one year wasn’t inflationary, although he acknowledged it exacerbates Canada’s housing crisis. It was unclear if he was reading from Liberal government speaking notes.
EURUSD drifted in a 1.0772-1.0801 range. German November inflation data was as expected and a non-event (actual HICP 2.3% y/y).
GBPUSD drifted in a 1.2555-1.2602 range and got a minor lift due to weaker UK Consumer Inflation Expectations (actual 3.3 vs. 3.6 in October).
USDJPY churned in a 142.50-144.13 range. The rally was sparked after Japanese Q3 GDP was weaker than expected, which suggested the BoJ may delay tightening monetary policy.
AUDUSD firmed in a 0.6592-0.6621 band due to more chatter of fiscal stimulus from China.
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