U.S. Session Forex Recap – Mar. 7, 2016

  • U.S. economy added 242K jobs in Feb vs. 195K expected
  • U.S. Jan NFP figure upgraded from 151K to 172K
  • U.S. unemployment rate steady at 4.9% in Feb
  • U.S. trade deficit widened from $44.7B to $45.7B vs. $43.8B consensus
  • Canadian trade deficit at 0.7B CAD vs. estimated 1.0B CAD shortfall
  • Canadian Ivey PMI slumped from 66.0 to 53.4 vs. 58.2 forecast

The Greenback tossed and turned on NFP Friday but eventually ended the day lower against most of its forex rivals.

Major Events:

U.S. non-farm payrolls report – A lot of volatility was seen among the dollar pairs during the actual release of the jobs report, as the economy beat expectations with a 242K gain hiring for February. To top it off, the previous month’s reading enjoyed an upgrade from 151K to 172K, indicating that jobs growth was stronger than initially reported.

Meanwhile, the unemployment rate held steady at 4.9% as expected. However, average hourly earnings fell by 0.1% instead of showing the projected 0.2% uptick, hinting that the lack of wage growth for the period might prevent the strong jobs gains from translating to a pickup in consumer spending.

Mixed data from Canada – Reports from Canada came in mixed, with the trade balance beating expectations and the Ivey PMI falling short. The former showed a deficit of 0.7 billion CAD, slightly wider than the previous 0.6 billion CAD shortfall but still smaller than the projected 1.0 billion CAD deficit.

The Ivey PMI, which tracks business conditions based on a survey of purchasing managers, crashed from 66.0 to 53.4 in February, lower than the projected drop to 58.2. This indicates that the industry grew at a much slower pace then.

Yet another oil price rally – Reports that U.S. rig counts have been falling spurred speculations of slower production, thereby lifting crude oil prices at the end of the week. As it turns out, drilling companies have been reporting declines in oil and gas rigs for the past few weeks, easing fears of a supply glut.

In fact, Baker Hughes reported that the U.S. rig count is down to levels not seen since 2009, as there are 69% fewer rigs of all kinds from the peak of 1,609 in October 2014. WTI crude oil popped up to the $36/barrel area and Brent crude oil advanced to $39/barrel.

Major Currency Movers:

CAD – The Loonie was one of the biggest gainers for the day, as its rally was fueled by rising crude oil prices.

USD/CAD broke below the 1.3400 support zone to a low of 1.3335, CAD/JPY broke out of consolidation to a high of 85.77, EUR/CAD edged back below the 1.4700 handle after a brief pullback, and GBP/CAD found resistance at 1.9000.

USD – The Greenback made a lot of quick moves during the trading session but eventually closed lower.

EUR/USD dipped to a low of 1.0904 upon seeing the NFP results but zoomed back up to a high of 1.1040, GBP/USD pulled back to 1.4108 before rallying to 1.4249, AUD/USD was unstoppable in its climb to the .7400 levels, and USD/JPY found support around 113.50 before climbing to 114.25.

Watch Out For:

  • 12:30 am GMT: Australia ANZ job advertisements (considered a leading indicator of employment)
  • 3:40 am GMT: BOJ Governor Kuroda’s testimony
  • 5:00 am GMT: Japanese leading indicators

See also:

Asian Session Recap

London Session Recap

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