USD / CAD – Canadian Dollar direction at mercy of jobs data

– US and Canada Jobs data ahead.

– Markets hoping for Fed rate cut in September.

– US dollar trading defensively ahead of data.

USDCAD: open 11.3609, overnight range 1.3602-1.3618, close 1.3613, WTI $83.84, Gold, $2362.30

The Canadian dollar is trading with a modest bid and flirting with major resistance ahead of this mornings US and Canadian employment reports.

Canada’s Labour Force Survey (LFS) is expected to show a gain of 22,500 jobs in June, marginally lower than the 26,700 in May while the unemployment rate inches up to 6.3% from 6.2%. A higher than expected result would make it difficult for the Bank of Canada to reduce interest rates at its July 24 meeting and give the Loonie a bit of additional support.

However, the US job numbers are more important to FX traders. Today’s nonfarm payrolls data is expected to provide further evidence that the labor market is easing. Analysts are forecasting that the US gained 190,000 jobs in June, 82,000 less than in May. Average hourly earnings are expected at 0.3% m/m, compared to 0.4% previously, while the unemployment rate remains unchanged at 4.0%. If NFP is lower than expected, it will raise the odds of a September rate cut and drive the greenback lower. If that happens, the news will overshadow the Canadian report and provide some support to the Loonie.

EURUSD extended gains overnight, rising from 1.0809 to 1.0831 on anticipation of a soft nonfarm payrolls number. Traders ignored yesterday’s ECB minutes, which showed the June rate cut was not a slam dunk, as some members did not want to cut rates. EURUSD is getting some support after the latest French election polls suggest that Marine Le Pen’s National Party will fall far short of an absolute majority. An Elabe poll projects National Rally at 200-230 seats, New Popular Front at 165-190, and President Macron’s party and allies at 110-135.

GBPUSD rallied from 1.2754 to 1.2785 following the Labour Party’s massive victory, which heralds the reign of Prime Minister Keir Starmer. Not really. The rally was just a coincidence because all of the UK and financial media expected the election outcome.

USDJPY traded negatively in a 160.53-161.40 range due to concerns about BoJ FX intervention and today’s nonfarm payrolls data adding to US dollar selling pressures.

AUDUSD drifted in a 0.6112-0.6125 range supported by AUDNZD demand and general US dollar weakness in addition to expectations that the RBA delays cutting rates.

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