USD/CAD - Canadian Employment Report on Deck

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The Canadian dollar is firmer to start the day. USD/CAD broke below minor support at $1.3240 around lunchtime yesterday and consolidated those losses overnight. Statistics Canada releases the monthly Labour Force Survey, which is forecast to show a gain of 12,500 jobs, and an unchanged unemployment rate of 5.5%. A weaker than expected report should have limited impact on the currency. It would be "payback" after the series of robust reports seen earlier this year. However, much stronger than expected would drive USD/CAD down to $1.3170. 

The Canadian dollar got a bit of a lift from a surge in AUD/USD. The Australian currency recouped all of its post-Reserve Bank of Australia rate cut losses and has risen 1.96% since Wednesday. Reserve Bank of Australia Governor Philip Lowe’s Semi-annual testimony to the House of Representatives Economics Committee sparked the rally. 

The governor delivered a rather positive take on the economy. He said "there are signs the economy may have reached a gentle turning point. Consistent with this, we are expecting the quarterly GDP growth outcomes to strengthen gradually after a run of disappointing numbers. This outlook is supported by a number of developments including: lower interest rates, the recent tax cuts, a depreciation of the Australian dollar, a brighter outlook for investment in the resources sector, some stabilization of the housing market and ongoing high levels of investment in infrastructure. It is reasonable to expect that, together, these factors will see growth in the Australian economy return to around its trend rate next year." He acknowledged downside risks from trade tensions, but for traders, that wasn’t anything new.

The AUD/USD rally lifted New Zealand and Canadian dollars.

USD/JPY gapped lower at the Asia open on the back of a steep drop in US 10-year Treasury yields. The losses were quickly recovered, but sellers emerged in Europe and USD/JPY dropped to 105.66 in early Toronto trading.

The British pound is getting hammered GBP/USD plummeted from 1.2146 in Asia to $1.2060 in Toronto. A mix of weaker-than-expected U.K. economic data and elevated fears of a "no-deal" Brexit fueled the selling. Q2 Gross Domestic Product was -0.2% q/q in June compared to a 0.5% q/q rise in May. Manufacturing Production fell 1.4% y/y, and Industrial Production was -0.1% m/m. The bad economic news was on top of reports that U.K. Prime Minister Boris Johnson wants to leave the European Union without a deal on October 31 and then have an election on November 1.

The risk of another Italian election has helped to cap EUR/USD in the 1.1210 area. A series of soft Eurozone economic reports recently and expectations that the European Central Bank will opt for more monetary stimulus in September is weighing on prices.

There are not any notable U.S. economic reports available today.

Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
Learn how KnightsbridgeFX can help you save up to 2% when buying or selling US dollars compared to your Canadian bank’s rates – click here to compare bank rates