USD/CAD edges lower amid rallying oil prices, holds above 1.3400 ahead of Canadian jobs data
|- USD/CAD retreats from the 1.3475 supply zone and is pressured by a combination of factors.
- Crude Oil prices jump to a two-week high and underpin the Loonie amid a modest USD slide.
- The divergent Fed-BoC outlook, recession fears lend support ahead of the Canadian jobs data.
The USD/CAD pair continues with its struggle to make it through the 1.3475 resistance zone and attracts some intraday selling on Friday. The intraday downfall drags spot prices to a fresh daily low, around the 1.3430 area during the first half of the European session and is sponsored by a combination of factors.
Crude Oil prices regain strong positive traction and jump back closer to the 100-day SMA resistance, hitting a two-week high. This, in turn, is seen underpinning the commodity-linked Loonie, which, along with a modest US Dollar pullback, exerts some downward pressure on the USD/CAD pair. That said, any meaningful downside seems elusive, warranting some caution for bearish traders before positioning for any further intraday depreciating move.
Worries about a deeper global economic downturn could act as a headwind for the black liquid and keep a lid on any optimism in the markets. Apart from this, expectations for further policy tightening by the Fed favour the USD bulls and support prospects for the emergence of some dip-buying around the USD/CAD pair. In fact, a slew of FOMC members, including Fed Chair Jerome Powell, stressed the need for additional rate hikes to tame inflation.
The Bank of Canada (BoC), on the other hand, is expected to be the first major central bank to pause the policy-tightening cycle following eight rate hikes in the past 11 months. The divergent Fed-BoC outlook on future rate hikes adds credence to the positive bias. Traders, however, might refrain from placing aggressive directional bets around the USD/CAD pair and prefer to wait for the release of the latest Canadian monthly employment details.
Investors will further take cues from the release of the Preliminary Michigan Consumer Sentiment Index from the US. This, along with Fed Governor Christopher Waller's speech and the broader risk sentiment, might influence the USD. Apart from this, Oil price dynamics should contribute to producing short-term trading opportunities around the USD/CAD pair. Nevertheless, spot prices seem poised to end in the positive territory for the second successive week.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.