Canada exempt from steel tariffs. USDCAD soft ahead of US and Canadian job reports. Large option expiry could come into play.
  • USDCAD: Dollar/CAD didnt do much in NY trade yesterday, which was not surprising given all the event risk scheduled for this morning. The market made another attempt above the 1.2920s into the London close but the move didnt have much momentum and then we moved swiftly back below the level later in the afternoon as the Trump administration confirmed Canadas exemption from the steel tariffs. Similar to Wednesday, this left the market with another negative closing pattern, which has allowed USDCAD to leak lower in overnight trade. Horizontal chart support at 1.2870 is holding once again and we have some more support underneath at 1.2850 at this hour. Next up at 8:30amET are the Canadian and US employment reports for February. Markets are expecting +21k jobs for Canada and +205k jobs for the US. The consensus estimate for average hourly earnings in the US is +0.2% MoM and +2.8% YoY. If USDCAD breaks support a 1.2850, there is not much further support until the 1.2770s. Should USDCAD break back above the 1.2920, we would not be surprised to see the market attack the 1.3000 level as we have a large option expiry there at 10amET (now $1.6bln notional in size). EURCAD had a very rough day yesterday, but it was all EURUSD driven as Mario Draghi dialed back the hawkish tone of the ECBs latest monetary policy decision when speaking to reporters. GBPCAD moved lower as well, as sterling followed the Euro lower, but buyers are trying to form a near term base here at support in the 1.7770s.

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Erik Bregar - Director, FX Trading
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