USD/CAD consolidates above mid-1.2700s, traders await Canadian jobs report
- USD/CAD struggled to gain any meaningful traction on Friday and remained confined in a range.
- The USD gained traction for the second successive day and extended some support to the major.
- An uptick in oil prices underpinned the loonie and capped gains ahead of the Canadian jobs report.
The USD/CAD pair seesawed between tepid gains/minor losses through the first half of the European session and was last seen trading near the 1.2770-1.2775 area, nearly unchanged for the day.
A combination of diverging forces failed to provide any meaningful impetus to the USD/CAD pair and led to subdued/range-bound price moves on the last day of the week. The US dollar added to the previous day's US CPI-inspired gains and scaled higher for the second successive day. This, in turn, extended some support to the major, though a fresh leg up in oil prices underpinned the commodity-linked loonie and capped the upside for spot prices.
The US Bureau of Labor Statistics reported on Thursday that the US consumer inflation sky-rocketed to a new 40-year high in January. Against the backdrop of the recent monster gains in commodity prices, the data added to growing market worries about a major inflationary shock.
This, in turn, reaffirmed bets for an imminent start of the policy tightening by the Fed in March and was seen as a key factor that continued benefitting the greenback.
Apart from this, concerns about the worsening situation in Ukraine, along with the risk of a further escalation in tensions between Russia and the West acted as a tailwind for the buck. On the other hand, the Canadian dollar drew support from the emergence of some buying around crude oil prices. This, to a larger extent, offset the supporting factors and kept a lid on any meaningful upside for the USD/CAD pair, at least for the time being.
Market participants now look forward to the release of the monthly employment details from Canada, due for release later during the early North American session. This, along with oil price dynamics, should influence the loonie and provide some impetus to the USD/CAD pair. Traders will further take cues from the release of the Prelim Michigan US Consumer Sentiment Index, though the focus will remain glued to fresh developments surrounding the Russia-Ukraine saga.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
