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Forex news for North American trading on October 9, 2020.
Oh Canada! The US
employment data was released last Friday, so Canada had all the
attention to itself today when they released their jobs report for the
month of September. The numbers did not disappoint. The net
change in employment rose by 378.2K vs. expectations of
150K. Most of the job gains were in full-time employment with a
gain of 334K (vs. 205.8 K last month). Part-time jobs rose by
44.2K. The unemployment rate fell sharply to 9.0% from 10.2% last
month and much lower than the 9.8% expectations. Hourly
wages increase by 5.4%. The participation rate rose to 65% from
64.6% last month. All was good news.
The number sent the CAD
higher/the USDCAD lower. Moreover, the move helped to kick
start a dollar lower trend that continued in the other
currencies in trading today.
Looking at the strongest and
weakest currency rankings (see chart above), the USD is ending the day as
the weakest currency on the day by over doubled the
margin from the next weakest. The NZD was the strongest.
The dollar
fell partly on the back of “risk on ” sentiment.
US stocks market rose smartly once again with the major
indices close at the highest level since September 2.. That helped
to send flows into currencies like the NZD and AUD.
The dollar may also be
lower because Washington lawmakers (and the President) seem to be playing
a game on the stimulus where nothing gets done. This week the President
went from “I am calling off all stimulus negotiations until
after the election” on Tuesday, to “I want to provide more aid
than either party is offering”. Meanwhile, Senator McConnel says the
GOP does not want to go over $1.8T. The Dems are at $2.2T and both have other
requirements like aid to state and local government for the Dems, and “no
liability” for the GOP. PS later toward the close the White
House spokesperson said that the White House was now looking for $1.8
trillion max deal (and not better than all of the other deals) .
Do you ever get the feeling where
there is so much sarcasm going around that it’s hard to tell the
truth from reality?
I get the feeling neither
party wants a deal, but that’s not stopping them spewing
off a bunch of lies in the process.
Who knows maybe there will be a
surprise deal over the weekend, but if the pundits are right, the Dems
have one agenda, the GOP another, and now the President a
third. At the end of the day, the GOP – who controls the senate – will have
to approve and vote on a deal at least until January. The
election results in 3+ weeks will decide who controls Washington at that
point. In the meantime, I can’t help but think the president
will be doing all he can to prop up the stock market, and the Dems will do all
they can to shift blame on the President.
Some technical thoughts on the
major currencies:
- EURUSD: The
EURUSD surged above a downward sloping trendline on the hourly
chart at around 1.1797 and then the high price for the week at
1.18075 and the 50% midpoint of the move down from the September 1
high. That level comes in at 1.1811. Going into the new week
staying above the midpoint would keep the buyers firmly in
control. The next upside target would come in at 1.1858. That is the
61.8% retracement of the same move down. - GBPUSD: The GBPUSD traded to
the highest level since September 8 as the clock ticks
toward the October 15 ”drop dead” date imposed by PM
Johnson with issues (like fishing) still to be resolved. The price
action today moved above a swing area between 1.2999 and 1.3006
that has capped the pair going back to September 11.
That area is now support and a risk defining levels for longs. Stay above,
and the buyers are in control. Move below and the sellers are back in the
game. The pair is up testing a topside trend line on the hourly chart
(connecting highs from October 1 and October 6) at 1.3040 (and moving
higher). In the new week, that level will be the closest barometer for
bulls and bears. More upside momentum will have traders eyeing
the 50% midpoint of the move down from the September 1 high
at 1.30777. A move above that level opens the door for further
upside potential. - USDJPY: The USDJPY did not
find sellers of the JPY (buyers of the USDJPY) on risk on sentiment, but
instead saw the pair move lower with the overall dollar selling. The
pair cracked below its 100 hour moving average at 105.822 in the
early New York sessionand quickly scooted down to test the 200 hour
moving average at 105.672. After consolidating above and below that
moving average level for a few hours, sellers reentered in the
New York afternoon pushing the pair down to session lows at
105.57.Technically, the 200 hour moving
average (at 105.672) will be resistance in the new
trading week. A move above that level would have traders looking
back toward the 100 hour moving average at 105.822. On the
downside the next key target comes in at 105.519. That is the 50%
midpoint of the range for the month of October. Get below that
level should open up the door for further downside. - NZDUSD: The NZD was the
strongest currency, and the NZDUSD was the biggest mover with a gain of
1.4% on the day. That move got a shove higher in the NY
session when the pair moved above near converged 100 and 200 hour MAs at
0.6610 area. The subsequent run to the upside was able to extend
above the 50% retracement of the range since September 18.
That level came in at 0.66539. Swing highs from October 1,
October 2, October 5 and October 6 all came between 0.6653
and 0.6657. That ceilingwas also broken. In the new trading
week staying above 0.6653 will be more bullish. Move
below and there could be some further
corrective downside momentum. On more upside,
swing levels from mid-September come in between
0.6674 and 0.6683. The 61.8% retracement of the move down
from the September 18 high comes in at 0.66877. Get above that
level and further upside momentum can be expected. - USDCAD: The
USDCAD peaked on Wednesday and trended
lower since that high at 1.33397. The low price of the last hour of trading at 1.3116. Technically, the pair fell below its 61.8% retracement of the range since September 1. That level comes in at 1.31556. Stay below that level in the new week of trading and the sellers remain in control. On the downside the end of day selling took the price below swing areas from mid-September between 1.3118 and 1.3126. That will be close resistance in the new trading week. Staying below 1 of traders looking toward the September lows which extend all the way down to 1.2993.