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USD / CAD - Canadian dollar steady

- Saudi Arabia cuts oil production by 1 million barrels/day.

- Global equity markets grind higher.

- CAD outperforms as US dollar hangs on to post-nonfarm payroll gains

USDCAD snapshot: open 1.3440-44, overnight range 1.3420-44, close 1.3429, WTI $73.00, Gold $1944.83.

The Canadian dollar rallied sharply on May 31 and continued to consolidate gains in a USDCAD range of 1.3420-1.3550, overnight.

The Canadian dollar is the best performing G-10 major currency since Friday’s NY opening. It only lost 0.20% compared to the British pound which fell 1.09% and the Australian dollar which lost 0.69%.

Friday’s US employment report surprised to the upside. This suggested the US economy is robust and will avoid a recession, despite 500 bps rise in interest rates recently.

Saudi Arabia is partially responsible for the Canadian dollar's outperformance. The weekend Opec meeting in Vienna was somewhat acrimonious. When the Saudi’s could not convince the rest of the cartel to cut production to cut oil production to shore up prices, they opted to cut their own production by 1.0 million barrels/day.

That led to a 3.3% jump in West Texas Intermediate, which rose to $74.30 from a NY closing level of $71.88.

Wednesday’s Bank of Canada meeting provides another layer of support to the Canadian dollar. After the Bank of Canada paused hiking rates at the March meeting, Governor Tiff Macklem claimed that future rate increases would be data dependent. That statement will be tested on Wednesday.

Canada GDP growth was stronger than the BoC forecast, and inflation decreases were slower than expected. A few economists and analysts believe it is enough to trigger a 25 bp rate hike at Wednesday’s meeting.

However most analysts believe rates will remain unchanged as there is no press conference.

EURUSD traded in a 1.0684-1.0712 range and is at the session low in early NY trading. Prices are on the defensive and consolidating losses following Friday’s US data. Weaker than expected Sentix Investor Confidence overshadowed steady German and Eurozone Services PMI data.

GBPUSD mirrored EURUSD moves and traded in a 1.2380-1.2448 range. GBPUSD is supported at 1.2320, the uptrend line from March 15 and by expectations for higher UK interest rates.

USDJPY climbed from 139.98 to 140.45, extending Friday’s rally due to widening Japanese and US interest rate spreads.

AUDUSD traded in a 0.6581-0.6609 range due to broad US dollar strength. Liquidity was poor due to Australian and New Zealand holidays.

US ISM May Services PMI and April Factory Orders data are on tap.