USD/CAD: Bulls and bears jostle around mid-1.2100s ahead of US NFP, Canadian jobs data
- USD/CAD bears catch a breather around late 2017 lows, marked the previous day.
- Virus woes, news from China battle easing of reflation risk, vaccine optimism.
- Market sentiment dwindles ahead of the key employment report.
- WTI stays depressed for third consecutive day, eyes China Caixin Services PMI, covid updates.
USD/CAD consolidates the heaviest drop in 11 months while picking up bids near 1.2160. Even so, the Loonie pair is up only 0.08% so far during the key Friday that offers monthly employment data from the US and Canada.
The quote smashed the three-year low during its heavy fall backed by the risk-on mood that dragged the US dollar. Also favoring the USD/CAD sellers could be the Bank of Canada’s optimism, not to forget the first tapering among the major economies.
Behind the risk-on mood were Fed chatters rejecting fears of rising inflation pulling the trigger of monetary policy normalization. Also on the same side was the news that the US and European Union’s (EU) support to waive the coronavirus (COVID-19) vaccine patents. Additionally, upbeat early signals of the US jobs report offer extra strength to the market’s optimism.
Alternatively, the US cap on investments in China companies and worsening virus woes, not to forget the pre-data cautious sentiment, seem to weigh on the mood. WTI’s weakness, down 0.26% to $64.67 by the press time, also weighs on the USD/CAD prices.
Looking forward, China’s Caixin Services PMI for April and covid updates may entertain short-term traders ahead of the jobs report for the previous month.
Forecasts suggest that the Canadian Unemployment Rate may jump from 7.5% previous readouts to 7.8% and the Net Change in Employment could drop to -175K versus +303.1K prior. The downbeat expectations seem to have taken clues from the recent activity restrictions due to the covid resurgence in Canada.
Read: Canadian Jobs Preview: US demand likely to outweigh covid concerns, push hiring, CAD higher
On the contrary, US Nonfarm Payrolls are expected to jump from 916K to 978K and the Unemployment Rate could also ease from 6.0% to 5.8%.
Read: US April Nonfarm Payrolls Preview: Leading indicators point to another strong NFP
Considering the market favors for USD bulls, based on data, USD/CAD may extend the latest corrective pullback.
Technical analysis
Unless staying below 1.2250-45 area, comprising 2018 low and a downward sloping trend line from March 18, USD/CAD bulls may not risk taking entries.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
