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.

Anil Panchal FXStreet

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.

Additional important levels

Overview
Today last price	1.2158
Today Daily Change	8 pips
Today Daily Change %	0.07%
Today daily open	1.215

Trends
Daily SMA20	1.2426
Daily SMA50	1.2516
Daily SMA100	1.2624
Daily SMA200	1.288

Levels
Previous Daily High	1.2289
Previous Daily Low	1.2142
Previous Weekly High	1.2491
Previous Weekly Low	1.2266
Previous Monthly High	1.2654
Previous Monthly Low	1.2266
Daily Fibonacci 38.2%	1.2198
Daily Fibonacci 61.8%	1.2233
Daily Pivot Point S1	1.2098
Daily Pivot Point S2	1.2047
Daily Pivot Point S3	1.1952
Daily Pivot Point R1	1.2245
Daily Pivot Point R2	1.234
Daily Pivot Point R3	1.2391

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.

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