February employment reports from the US and Canada in focus
Summary
  • USDCAD:Dollar/CAD is trading quietly bid this morning as traders await the February employment reports out of the US and Canada at 8:30amET. The expectations for the US report are +180k jobs gained, +0.3% MoM and +3.3% YoY growth in wages, and 3.9% on the unemployment rate. For Canada, markets are expecting a flat reading on job growth, +1.9% YoY growth in wages, and 5.8% on the unemployment rate. With a broad risk-off mood permeating through global stock markets this morning following terrible Chinese Trade Balance data released overnight, USDCAD traders are knocking at the door at chart resistance in the 1.3460s once again. A break above this level on strong US/weak Canadian employment figures could very well cause an explosion of buying into the 1.35s, as very little overhead chart resistance now remains until 1.3550. On the flip side, expect selling into 1.34 the figure should we get a weak US/strong Canadian result. CAD futures traders piled into the market with over 5k contracts in new positions yesterday. The COT report from the CFTC will finally be up to date when it is released later today (after the US government shutdown caused delayed distribution of the weekly data) and this is where well see latest update on the USDCAD net long fund position, as of the close on March 5th. April crude oil is getting crushed this morning (-2.5%) on reports that Norways sovereign wealth fund is considering divesting from upstream oil and gas producers. More here: https://www.ft.com/content/d32142a8-418f-11e9-b896-fe36ec32aece.

  • EURUSD:Euro/dollar is bouncing this morning, as the fund shorts appear to be covering ahead of the February US non-farm payrolls report out at 8:30amET and over 2.6blnEUR in options expiring at the 1.1250 strike at 10amET. The ECBs Nowotny was on the wires earlier this morning defending the central banks latest move to scrap interest rate hikes for 2019 and expand the TLTRO program for European banks. He said details on the new program would be decided by the June ECB meeting at the latest. USDCNH is trading steady, despite the much weaker than expected February import and export data of China, and reports from the WSJ that there are not yet any preparations for a US-China trade summit at the end of March (which markets were hoping for). Euro futures traders added a whopping 13,930 contracts in new positions yesterday, which was likely new short positions. Expect these positions to bail quickly should we get disappointing US employment and wage growth for February. Chart support today lies in the 1.1180s, while resistance comes in at 1.1240 and 1.1275.

  • GBPUSD:Sterling is leaking lower this morning as the EURGBP cross completes a successful retest of the 0.8550 support level. Chart support in the 1.3070s has fallen for GBPUSD, but shorts appear to be covering now and trying to regain the level ahead of the US employment report. Next week should be eventful for traders as the Theresa May will put her unpopular Brexit plan before UK parliament one more time on March 12th. Should it not pass (as is expected), UK lawmakers will formally be given the chance to vote on leaving the EU without a deal (March 13th) and extending Article 50 (March 14th).

  • AUDUSD:The Aussie continues to hang in there, despite the break below chart support in the 0.7020s late yesterday, falling copper prices, and the sour mood to global equities today. The latest bid to EURUSD ahead of the US jobs report appears to be the positive influence. We think the market could stage a recovery attempt here should the US report weaker than expected data. Chart resistance today comes in at the 0.7050s. Over 1.5blnAUD in options expire at the 0.7000 strike at 10amET this morning.
  • USDJPY:Dollar/yen has fallen apart today, and it was really the doom and gloom out of Mario Draghis press conference yesterday and the ensuing US stock market selloff that caused the market to give up chart support in the 111.60s. Todays weak Chinese data and another 14pt move lower in the S&Ps is adding to the markets troubles this morning, but the next support level in the 111.10-20 area appears to holding ahead of the US jobs report.
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