President Trump bailed out of the Paris Accord and traders bailed out of oil positions. West Texas Intermediate (WTI) dropped over 2 percent since yesterday’s close on fears that the lack of environmental controls means it is open season for oil drilling in the US. More US oil means a bigger global oil glut. WTI dropped from $48.01 to $46.86 and opened in New York just above the low.
In Asia, USDJPY was bid, rising from a low of 111.32 to 111.70 on the prospect that strong US nonfarm payrolls data will raise expectations for additional US rate hikes in 2017.
AUDUSD and NZDUSD traded with a negative bias inside very narrow ranges
EURUSD traded sideways inside a 1.1212-1.1227 range while traders awaited the US data. They ignored Eurozone Producer Price data that was higher than in March, but slightly below the April forecast.
Sterling drifted lower, weighed down by UK election polls, until a better than expected construction PMI report (Actual 56 vs forecast 52) gave it a lift. The jump in construction PMI pushed the FTSE100 to a new record high.
USDCAD traded higher overnight supported by the decline in oil prices and expectations for a strong US employment number.
US nonfarm payrolls is expected to show a gain of 185,000 jobs with a bump in average hourly earnings to 2.6% from 2.5% while the unemployment rate remains unchanged at 4.4%. The market is primed for a strong report suggesting that if it comes in “as expected” US dollar selling will occur.
The US employment report and oil price movements will overshadow today’s Canadian Merchandise Trade report. It is expected to be flat.
|2-Jun-17||Open-6 am EDT||High||Low|
USDCAD Technical outlook:
The intraday USDCAD technicals are bullish while prices are above 1.3495 A break above 1.3570 would suggest that a short term bottom is in place a target a retest of 1.3670. For today, USDCAD support is at 1.3495 and 1.3440. Resistance is at 1.3560 and 1.3610.
Today’s Range 1.3490-1.3590
Chart: USDCAD 4 hour
Source: Saxo Bank
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