– Robust US jobs data could ignite renewed US dollar demand
– Canada’s LFS report expected to show 25,000 new jobs.
– USD idling in quiet pre NFP market
USDCAD: open 1.4407, overnight range 1.4393-1.4422, close 1.4396, WTI $75.78, Gold, $2661.35
The Canadian dollar remains in consolidation mode and is trading with a negative bias ahead of the US and Canadian employment reports today. Of the two, the US data is the most important for broad US dollar moves. The Canadian results are overshadowed by Trump’s tariff threat.
Canada’s Labour Force Survey (LFS) usually takes a back seat to the US data, and that won’t change today. Canada is expected to have gained 25,000 jobs in December compared to 50,500 in November. However, the unemployment rate is expected to rise to 6.9% from 6.8%. The FX reaction to the Canadian results should be minimal, as it is Trump’s tariff plans and the Fed that are dictating direction.
Today’s December nonfarm payrolls data is expected to show 160,000 new jobs compared to 227,000 and an unchanged unemployment rate of 4.2%. A higher-than-expected NFP number will boost the US dollar as it suggests the Fed will sit on the fence for longer than expected.
The imposition of a 25% tariff on all goods imported into the US from Canada would be devastating. It would drive the economy into a deep recession and increase unemployment rates dramatically. So far, it’s just a threat. If Trump’s aim was to reopen trade negotiations, he won.
EURUSD traded quietly in a 1.0281-1.0312 range with traders sidelined ahead of today’s US NFP data. FX option expiries could exacerbate volatility around the 10 am NY maturity window.
GBPUSD traded in a 1.2267-1.2311 band. Prices continue to be pressured over concerns about the UK budget and rising debt.
USDJPY chopped about in a 157.62-158.45 range and is currently 157.96. The topside is limited due to renewed talk of a January rate hike and the threat of intervention, while a firm US Treasury 10-year yield at 4.70% provides support.
AUDUSD drifted in a 0.6181-0.6207 range. AUDUSD is weighed down by the possibility of the Reserve Bank of Australia cutting rates in February, along with ongoing challenges in China.
