USD/CAD extends its upside above 1.3700 amid the rally of USD, focus on US ADP, Services PMI

The USD/CAD pair climbs above the 1.3700 mark during the early European session on Wednesday. A rally in the US Dollar (USD) and the upbeat US data are the main drivers for the pair’s uptick. Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD relative to a basket of foreign currencies, surges to 107.17, the highest since November last year. USD/CAD currently trades around 1.3715, gaining 0.06% on the day.

Data released on Monday revealed that the Canadian S&P Global Manufacturing PMI for September came in at 47.5 from 48.0 in the previous reading. Additionally, a decline in oil prices dragged the commodity-linked Loonie lower as the country is the leading oil exporter to the US.

On the US Dollar front, the number of job openings for August stood at 9.6M from 8.9M (revised from 8.8M) in the previous reading, according to the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday. This figure came in better than the expectation of 8.8 million by a wide margin.

Furthermore, Cleveland Federal Reserve President Loretta Mester stated on Tuesday that she is likely to favor an interest rate hike at the next meeting if the current economic situation holds while mentioning that the Fed is likely at or near peak for interest rate target. Meanwhile, Atlanta Fed President Raphael Bostic said he will be patient and there is an urgency for us to do anything more.

The US employment data this week could offer hints about the further monetary policy of the Federal Reserve (Fed). The stronger-than-expected data could lift the Greenback demand and act as a tailwind for the USD/CAD pair.

Looking ahead, traders will keep an eye on the US ADP Employment Change and ISM Services PMI due on Wednesday. The highlight this week will be the release of Canadian employment data and US Nonfarm Payrolls on Friday. These events could provide a clear direction to the USD/CAD pair.