USD/CAD Open: 1.2121-25, Overnight Range: 1.2106-1.2128, Previous Close: 1.2110
WTI Oil is at $69.41 and gold is at $1,893.10. US markets are higher today.
For today, USD resistance is at 1.2109. Support is at 1.2071.
• Canadian employment report expected to be weak
• Analysts suggest there is upside risk to today’s NFP data
• US dollar opens higher, adding to Thursday’s gains
The Canadian dollar is under pressure ahead of employment data from the US and Canada. USDCAD rallied from 1.2050 yesterday to 1.2131 in early NY trading after two strong US economic reports.
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The ADP employment report showed the American economy added 978,000 jobs in May, easily beating the forecast for a 650,000 increase. Coincidently, the ADP forecast is identical to the NFP prediction. Next, Weekly Jobless Claims fell to levels last seen in March 2020 and the two reports fueled US dollar demand.
The US dollar rallied Thursday and extended gains overnight. 10-year treasury yields climbed from 1.58% to 1.62%, global equity markets stumbled, and gold prices fell. However, oil traders shrugged off the rise in the greenback and bought crude. WTI climbed to $$69.23/barrel overnight in the belief that a robust US economic recovery will help boost global growth and increase crude demand.
Canadian dollar traders ignored the rise in oil prices and focused on today’s Canadian Labour Force Survey (LFS). Analysts expect Canada to have lost 20,000 jobs in May, as a third-wave coronavirus outbreak led to new lockdowns and restrictions.
A weaker than expected Canadian report combined with a more robust than forecast NFP report will increase Canadian dollar selling pressures. However, Canadian dollar losses may be short-lived as the economic outlook for the summer and far is very positive. Pent-up consumer demand as coronavirus measures ease, combined with rising oil prices, and bearish long term technicals should attract Canadian dollar buyers.
EURUSD dropped to 1.2106 after closing in NY at 1.2127. Traders pared bullish bets based on a Eurozone economic recovery after yesterday’s US data raised risks the Fed would need to raise interest rates ahead of schedule. Weaker than expected Eurozone Retail Sales data for April didn’t help (actual -3.1% m/m vs 3.3 in March). A nonfarm payrolls print above 1.0 million would accelerate the risk and drive EURUSD to a test of support at 1.2000.
GBPUSD dropped from 1.4200 yesterday to 1.4085 in Asia, then bounced to 1.4120 in early NY trading. The rebound was encouraged by better than expected UK Construction PMI (actual 64.2 in May, compared to 61.6 in April).
Canada Ivey Purchasing Managers Index is on tap.
Today’s Suggested Range USD/CAD: 1.2070 – 1.2170
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