– Canada dollar pressured by higher US interest rate outlook.
– European markets closed for Easter Monday.
– US dollar posts small gains since Thursday NY open.
USDCAD snapshot: open 1.3495-99, Fri-Mon. range 1.3486-1.3528, close 1.3513, WTI $80.80, Gold $2000.60
The Canadian dollar did not get any lasting benefit from the domestic Labour Force Survey even though the number of new jobs (34,700) vastly exceed the forecast for a 12,000 gain. The strength of the report precludes the Bank of Canada cutting interest rates in the near future.
The Canadian dollar reacted to Friday’s US nonfarm payrolls data, rising from the Asian low of 1.3475 to a post-data peak of 1.3528, then consolidated in a 1.3487-1.3518 range until NY opened this morning. The US added 236,000 jobs in March which was close to expectations and the February results were revised higher.
Futures traders raised the odds for a 25 bp rate hike in May to 66%. Goldman Sachs economists expect a 25 bp May hike followed by another 25 bp increase in June.
The prospect of higher US rates did not result lifted the US 10-year Treasury yield from 3.27% to 3.41% before they eased to 3.37% today.
Geopolitical issues were largely ignored even though China surrounded Taiwan in what Beijing described as a “Taiwan sealing” exercise. The US sent a heavily armed missile cruiser through the South China Sea to remind China that the waters were international territory.
EURUSD traded in a 1.0864-1.0916 range since Friday with prices underpinned by expectations for two additional ECB rate hikes.
GBPUSD traded in a Friday-Monday band of 1.2398-1.2454 with the March 8 uptrend line intact above 1.2380.
USDJPY traded with a mild bid in a 131.50-132.79 range with the gains occurring with the rebound in the US 10-year Treasury yield.
Incoming BoJ Governor Kazuo Ueda promised to guide monetary policy “flexibly” leading to speculation that the bond yield control policy could be phased-out.
AUDUSD consolidated recent losses in a 0.0.6642-0.6679 range ahead of the Australian unemployment report due Wednesday.
There are no US or Canadian economic reports of note today.