Usd/cad Buyers Approach 1.2900 Ahead Of Us/canada Employment Data
- Trade Ideas
- 2022, 05 August
- USD/CAD extends the previous day’s rebound from weekly low ahead of the key US/Canada jobs report for July.
- US dollar tracks yields to consolidate recent losses, snaps two-day downtrend.
- Oil prices bounce off six-month low amid geopolitical concerns.
USD/CAD picks up bids to 1.2875 as buyers keep reins for the second consecutive day heading into Friday’s European session.
The Loonie pair’s latest gains could be linked to the US dollar’s rebound, as well as the market’s cautious optimism, ahead of the key US/Canada jobs report for July. In doing so, the quote also ignores the corrective pullback in prices of Canada’s main export item WTI crude oil from a six-month low.
That said, the US Dollar Index (DXY) snaps a two-day downtrend while printing mild gains around 106.00. The greenback gauge dropped during the last two days before tracing the yields to consolidate recent losses. It’s worth noting that the US 10-year Treasury yields stabilize around 2.069% after declining in the last two days. Even so, the US Treasury yields continued to portray the risk of recession as the difference between the 10-year and 2-year bond coupons remain the widest since 2000.
On the other hand, WTI crude oil prices rise 1.15% intraday while bouncing off the lowest levels since February, to $89.00 at the latest.
The recent gains of the US dollar, as well as the crude oil prices, could also be linked to the fears of fresh geopolitical challenges emanating from the Taiwan Strait as China reflects its dislike for US House Speaker Nancy Pelosi’s visit to Taipei. At the latest, US Secretary of State Antony Blinken recently told an East Asia meeting, per West Official, that China’s reaction to US House Speaker Nancy Pelosi’s Taiwan visit had been "flagrantly provocative".
Amid these plays, Wall Street closed mixed and the S&P 500 Futures print mild gains while taking rounds to the two-month high flashed the previous day, up 0.23% intraday around 4,162 by the press time.
Moving on, USD/CAD traders should be cautious as the US employment report is likely to flash comparatively weaker data, which in turn could defy the Fed hawks and weigh on the pair prices. However, a surprise increase in the headline Nonfarm Payrolls (NFP), expected 250K versus 372K prior, won’t hesitate to propel the greenback.
Unless crossing the 21-DMA hurdle surrounding 1.2910, the USD/CAD buyers remain unconvinced.
Buy above 1.2850 for 1.2890 and 1.2910
Sell below 1.2850 for 1.2830 and 1.2815