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MTrading Team • 2023-11-03

USDCAD appears dicey ahead of US, Canada employment data

USDCAD appears dicey ahead of US, Canada employment data

The risk appetite remains slightly positive despite the market’s anxiety ahead of the US and Canadian employment report for October. That being said, receding fears from Gaza join downbeat yields and fresh concerns suggesting no more rate hikes from the Fed in 2023 to weigh on the US Dollar, especially amid the recently mixed data and the Fed’s lack of hawkishness.

USDCAD appears the most inactive among the major currency pairs even as the firmer Crude Oil joins the broadly softer US Dollar. That said, the Gold Price recovers while NZDUSD leads the G10 winners versus the Greenback. Further, the EURUSD and GBPUSD are also in recovery mode amid the latest hawkish comments from the European Central Bank (ECB) and the Bank of England (BoE) officials.

Wall Street closed on the positive side and helped the US stock futures to edge higher, especially when Apple shares cheered upbeat earnings. That said, the Asia-Pacific shares are also mildly bid while joining the commodities and Antipodeans.

Elsewhere, BTCUSD drops more than ETHUSD even as crypto traders appear losing faith in ETF approvals. The reason could be spotted in a slew of Ethereum deposits.

Following are the latest moves of the key assets:

  • Brent oil extends the previous day’s rebound from 100-DMA above $88.00, up 0.40% intraday by the press time.
  • Gold price prints a two-day uptrend near $1,988, up 0.10% intraday at the latest.
  • USD Index dropped 0.10% intraday to 106.10, printing the second daily loss in four.
  • Wall Street closed positive and so did the Asia-Pacific stocks. However, equities in Europe and the UK begin the day on a dicey floor.
  • BTCUSD and ETHUSD both pare recent gains around $34,500 and $1,800 as we write.
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Cautious optimism prevails ahead of US NFP

The news suggesting Israeli Prime Minister (PM) Benjamin Netanyahu is considering a US request for a temporary truce in Gaza pushed back pessimism. Also, US Secretary of State Antony Blinken earlier said that they are determined to prevent escalation (in Gaza) while adding, “(There is) need to set conditions for durable, sustainable peace for Palestinians and Israelis.”

The same joined the Fed’s hesitance in suggesting one more rate hike in 2023 during the latest monetary policy meeting and weighed on the US Dollar even as the US Factory Orders and Nonfarm Productivty rose while Challenger Job Cuts dropped. That said, the latest Unit Labor Cost slumped whereas the Initial Jobless Claims rose.

On a different page, the Japanese government approved $110 billion of stimulus, mostly in the form of tax cuts, to fight inflation and fulled Nikkei 225, as well as favored the risk-on mood in Asia even as China’s Caixin Services PMI weakened for October. Additionally favoring the mood in the Asia-Pacific zone could be the upbeat prints of Australian Retail Sales growth for Q3, 0.2% QoQ versus -0.2% expected and -0.6% prior. Furthermore, the recently upbeat performance of the US equities, even before the release of Apple’s upbeat earnings, and a pullback in the Treasury bond yields also underpinned slightly positive sentiment and weighed on the US Dollar, which in turn allowed the Gold price to print the first daily gains in four.

Amid these plays, the US Dollar Index (DXY) remains pressured while the US stock futures and the Asia-Pacific shares edged higher. The same helps prices of Crude and Gold price to extend the previous day’s recovery and help the Antipodeans like the USDCAD.

  • Strong buy: USDCAD
  • Strong sell: ETHUSD, GBPUSD, Gold
  • Buy: USD Index, Nasdaq, USDJPY

US, Canada jobs report, US ISM Services PMI eyed

Considering the Fed’s hesitance in respecting the tighter monetary policy and citation of the two-sided inflation risks, a likely softening in the US Nonfarm Payrolls (NFP) to 180K, versus 336K prior, will exert additional downside pressure on the US Dollar. However, softer prints of the wage growth and an unimpressive Unemployment Rate become necessary for the same. Additionally, the upbeat Canadian jobs report and softer US ISM Services PMI can also weigh on the Greenback.

Alternatively, the market expects a downbeat US jobs report and the Fed has already signalled its unimpressive stand and hence any surprise strength in the data won’t hesitate to propel the US Dollar.

May the trading luck be with you!