Canadian Dollar consolidates amid Oil price rebound, US labor data in focus

USD/CAD consolidates around 1.4210 at the start of a week dominated by US labor market data.
US-Iran talks and rebounding Oil prices help limit downside pressure on the Canadian Dollar.
Scotiabank says the US Dollar rally looks extremely stretched, leaving room for a modest pullback.

Ghiles Guezout FXStreet

USD/CAD trades around 1.4210 on Monday at the time of writing, as investors remain on the sidelines ahead of a series of key US labor market releases, culminating with Thursday's June Nonfarm Payrolls (NFP) report. The US Dollar (USD) is edging lower, while the Canadian Dollar (CAD) is not finding support from rebounding Oil prices.

Market participants are now focused on the May JOLTS Job Openings report, the ISM Manufacturing Purchasing Managers Index (PMI) and the June ADP Employment Change data, all of which will precede the official employment report. These releases could shape expectations for the Federal Reserve's (Fed) monetary policy after Chairman Kevin Warsh recently said the central bank should refrain from providing forward guidance under the current policy environment.

On the geopolitical front, investors are watching Tuesday's talks between the United States (US) and Iran regarding the situation around the Strait of Hormuz. The improved diplomatic outlook has reduced safe-haven demand for the US Dollar, although markets remain highly sensitive to any renewed escalation in the Middle East.

The Canadian Dollar is also not benefiting from the recovery in Oil prices. West Texas Intermediate (WTI) trades around $70.60 at the time of press, up 0.68% on the day, after rebounding from an earlier decline triggered by reports that Washington and Tehran would resume negotiations. Higher Crude prices typically support the Canadian currency, given Canada's status as a major Oil exporter, but the Loonie remains weighed down by earlier Crude losses.

According to Scotiabank strategists Shaun Osborne and Eric Theoret, the Canadian Dollar may also benefit from narrower short-term US-Canada yield spreads. The bank estimates USD/CAD's fundamental fair value at 1.4135 and notes that positioning indicators point to an extremely overbought US Dollar. Scotiabank argues that this could cap further gains toward the 1.4250-1.4300 area and open the door to a modest pullback toward 1.4075-1.4080.

Canadian Dollar Price Today

The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.37%	-0.45%	0.10%	0.09%	0.12%	-0.20%	-0.25%
EUR	0.37%		-0.08%	0.48%	0.45%	0.51%	0.19%	0.12%
GBP	0.45%	0.08%		0.56%	0.54%	0.57%	0.24%	0.19%
JPY	-0.10%	-0.48%	-0.56%		-0.01%	0.00%	-0.33%	-0.36%
CAD	-0.09%	-0.45%	-0.54%	0.01%		0.02%	-0.31%	-0.37%
AUD	-0.12%	-0.51%	-0.57%	-0.00%	-0.02%		-0.32%	-0.36%
NZD	0.20%	-0.19%	-0.24%	0.33%	0.31%	0.32%		-0.04%
CHF	0.25%	-0.12%	-0.19%	0.36%	0.37%	0.36%	0.04%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).

Author

Ghiles Guezout

FXStreet

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

GBP/USD surges to multi-day peaks past 1.3250

GBP/USD leaves behind Friday’s small pullback and advances past 1.3250 level, or five-day highs, on Monday. Cable’s upside follows extra losses in the Greenback, while traders continue to assess the geopolitical front and upcoming key events.

EUR/USD pops to daily highs near 1.1430

EUR/USD starts the week on a positive note, climbing to as high as the 1.1430 zone, or daily tops, on Monday. The pair’s recovery comes in response to the broad-based US Dollar weakness, while investors continue to monitor developments from the Middle East ahead of the beginning of the ECB's annual forum.

Gold remains supported by $4,000

Gold remains under marked selling pressure, holding on just above the key $4,000 mark per troy ounce at the beginning of the week. The precious metal reverses two daily advances in a row as renewed effervescence in the Middle East revive inflation concerns and bolster Fed rate hike expectations.

Bitcoin four-year cycle: BTC risks 75% drawdown with four months of bear market still ahead

Bitcoin price continues to trend downward below the $60,000 support zone after losing over 50% of its value since the $126,199 high in October. Bitcoin’s four-year cycle, measured from cycle tops to bottoms, suggests that four months of a bear market are still ahead.

Just like Fed, is BoJ’s independence under threat?

When talking about central bank independence, most of the focus has been on Donald Trump’s pressure on the Federal Reserve. But a similar story, a quieter one for now, seems to be happening on the other side of the Pacific: Japan’s government may be testing the Bank of Japan’s independence.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.