USD/CAD - Markets React to U.S. Jobs

Canadian Gross Domestic Product for the second quarter surged to 4.5% pace and topped all G7 countries on growth. Household spending was the primary driver behind the numbers while residential construction was relatively flat with large gains in home renovations. The data sparked new flames in the Bank of Canada's rate decision next week with odds jumping to 41% probability of a hike from 27%. The Canadian dollar made significant gains against its G10 currency pairings after the data was announced.

Today is jobs day in the U.S. with expectations on Non-farm Payrolls at 187,000 the posting of 156,000 is going to cool any short-term rate normalization from the Fed. U.S. Unemployment Rate rose to 4.4% from 4.3% level. This jobs release provides evidence the U.S. economy is cooling and hinders any speculation of a rate hike for the end of the year. At 10 a.m. from the U.S., investors have Michigan Consumer Sentiment, Institute for Supply Management manufacturing report, and construction spending.

The euro remains well supported following today’s European Manufacturing Purchasing Managers Index numbers, and the pair with the Canadian dollar currently holds above a mid-market rate of 1.19. No further euro-zone data is due before the weekend so attentions shifts to this morning’s U.S. non-farm payroll and ISM manufacturing numbers. Markets will also have one eye looking ahead to next week’s European Central Bank policy meeting with expectations for updated guidance and a planned approach to Quantitative Easing tapering firmly in their sights.

The pound sterling ground through another lifeless session on Thursday, mulling between its recent ranges this week. While the U.K. economic calendar provided no spark, third-round Brexit negotiations ended in Brussels with both sides maintaining a fair degree of distance, particularly on the size of the U.K.’s ‘divorce bill. The headlines from the Brexit talks seemed to be sending Cable lower, through the morning session, but a lackluster macroeconomic data set from the U.S. helped the pound retrace some ground.

Attentions were acutely turned to the Fed’s preferred inflation measure, the PCE index, and an uninspiring print dampened expectations of a revival in price pressures and the poor read, coupled with softer than anticipated consumer spending and pending home sales, forced the worlds base currency lower when values against most G10 counterparts.

The Australian dollar opened broadly stronger this morning. Overnight, a sharp increase in the Australian Industry Groups Mfg Index, which presents business conditions in the Australian Manufacturing Sector, combined with the Reserve Bank of Australia's commodity Index rising to 20.1% vs. 17.1% the previous month, helped the Aussie gain against most of its major counterparts. This morning’s headline US jobs and manufacturing prints further gave the Australian-U.S.-dollar pairing a boost.

Oil (WTI): $47.06 U.S. per barrel

Gold: $1,323.10 U.S. per ounce

Silver: $17.56 U.S. per ounce

Copper: $310.25 U.S. per tonne

Dollar Index: 92.37

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