Baystreet.ca - - US NFP expected at 142,000 (previous 140,000)
- Oil rises with geopolitical tensions,
- US dollar traded quietly overnight ahead of today’s US employment numbers.
USDCAD: open 1.3557, overnight range 1.3544-1.3568, close 1.3556, WTI $74.45, Gold, $2657.47
The Canadian dollar is under pressure and is testing key support levels despite a surge in WTI oil prices. USDCAD has climbed to levels last seen three weeks ago and the gains occurred even as WTI oil soared 12.5% since Tuesday.
Oil prices soared after US President Joe Biden told the world that the US and Israel were discussing an attack on Iranian oil fields in retaliation for Iran’s missile barrage at Israel. Many analysts are predicting WTI could rise by another $20/b if hostilities intensify. Other analysts point to large global supplies and suggest gains will be limited. Maybe so, but the price of gas is expected to jump by 4-6 cents a liter in the GTA this weekend.
Today’s US nonfarm payrolls report is expected to show a gain of 142,000 jobs in September with the unemployment rate unchanged at 4.2%. This report will likely be will be forgotten by the time of the next FOMC meeting as there are plenty of top-tier economic reports in the pipeline.
EURUSD moved within a narrow 1.1020-1.1040 range as traders await the release of today’s US nonfarm payrolls data. Investors are adopting a wait-and-see approach, watching how the data will influence the interest rate gap between the Euro and the US dollar. A stronger report than anticipated, coupled with a higher unemployment rate, could boost the euro. The European Union also confirmed additional tariffs of up to 35% on Chinese electric vehicles, which had been expected.
GBPUSD is attempting to bounce back from yesterday’s decline, climbing from 1.3119 in Asia to 1.3173 during early New York trading. The pound took a hit after Bank of England Governor Bailey indicated that policymakers might take a more aggressive stance on rate cuts. However, today, BoE Chief Economist Huw Pill advised caution, citing global economic instability as a reason to proceed carefully. There are $3.4 billion worth of 1.1000 option strikes set to expire at 10:00 am.
USDJPY remained steady, consolidating gains from the previous day within a 145.92-146.94 range. Support came from the Prime Minister and Bank of Japan Governor, both expressing hesitance toward further rate hikes. The pair also found backing from US 10-year Treasury yields, which touched 3.863% before slipping slightly in New York trading.
AUDUSD saw a decline after yesterday’s US ISM services data, then traded sideways between 0.6835-0.6853 in overnight sessions ahead of key US data today. Meanwhile, Australian markets will be closed on Monday, contributing to the subdued trading environment.