The U.S. employment report is released today due to Friday’s July 4th holiday. The consensus forecast is for non-farm payrolls to increase by three million. There is a risk that the results could be higher than expected due to complications around how state unemployment assistance plans may have prevented laid-off employees being counted in the NFP survey.
The results are likely to be overshadowed by recent U.S. coronavirus developments. Wednesday, America reported a daily record of 52,743 new coronavirus cases, forcing governors in six states to re-close bars, restaurants, and other services that have just reopened. However, reports of a potential coronavirus vaccine stoked risk sentiment.
Yesterday’s congressional testimony by Federal Reserve Chair Jerome Powell proved to be a non-event for traders.
He didn’t offer any new insight into future monetary policy while repeating that plenty of downside risks remained. Later, the Federal Open Market Committee minutes from the June 10 meeting were released. The minutes showed the FOMC members were content to keep rates unchanged until 2022, and will maintain accommodative monetary policy.
The Canadian dollar rallied Tuesday and Wednesday. USD/CAD dropped from $1.3700 to hit $1.3545 yesterday, in part due to lingering month-end portfolio re-balancing flows. Prices inched higher overnight, climbing to $1.3609 before the rally stalled. Canadian dollar gains are lagging that of the other commodity currencies, as well as the rest of the G-10 currencies.
A jump in crude oil prices isn’t providing much support either. Instead, traders are focused on bullish USD/CAD technicals that target gains to $1.3850 while prices are above $1.3550.
In Asia, positive risk sentiment lifted equity markets, as well as AUD/USD and NZD/USD. AUD/USD rebounded from a low of $0.6835 on Tuesday to $0.6935 in early Toronto trading. NZD/USD traded similarly with both currencies boosted by a jump in China Manufacturing Purchasing Managers Index data.
EUR/USD bottomed out at $1.1190 in New York yesterday morning, and climbed steadily, closing at $1.1251. Price action was steady in Asia. Better-than-expected Eurozone unemployment news, improving Producer Price data, combined with Wednesday’s better than expected
Eurozone and German Purchasing Managers Index reports fueled the gains.
GBPUSD climbed steadily, rising from 1.2260 Tuesday to 1.2526 just before NY opened today.
Today’s U.S. data includes NFP, Initial Jobless Claims, and Factory Orders. Canada Trade data is also on tap.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
