[Dan]

Its all about the Kiwi, AUD and CAD again this morning, with commodity bloc leading the major currency pack’s advances against the generally softer USD. The CAD – once again – made a big move just ahead of the shock employment report which showed the first gain in employment in six months. There may be some quibbles about the quality of bulk of job gains (in the main, self employed) and questions about the sustainability of the improvement but after better jobs data in Australia and Canada this week, expectations for better numbers in the US will probably rise and the “shoots” will look a little greener if the US produces. The fact that we saw a lot of CAD buying (stop loss selling noted in USD/CAD as well as
GBP/CAD and other CAD crosses) before the data perhaps means that we may see some profit taking in the near term. Back and filling is likely to be limited to the upper 1.16s/low 1.17s in the short term and if the US data does come in much better than expected, lifting risk sentiment even further, the USD bounce may be very shallow. Traders remain generally bullish on the CAD still and think the risk is still for a fair bit more downside to come in funds in the medium term (1.04/1.05) though some would still rather sell rallies than chase funds lower at the moment. Bullish CAD on the crosses – CAD/JPY and CAD/CHF in particular – and note that GBP/CAD has broken out on the downside of its three month sideways trading range, which suggests the risk of a drop back under 1.70.