USD/CAD faces fragile hurdles around 1.3750 despite hawkish BOC Macklem and firmer oil
- USD/CAD has sensed hurdles around 1.3750 as the focus has shifted to US/Canada employment data.
- BOC Macklem’s hawkish commentary has failed to support the loonie bulls.
- OPEC+ production cuts announcement has infused fresh blood into the oil bulls.
The USD/CAD pair has faced barricades while attempting to cross the immediate hurdle of 1.3750 in early Asia. The asset has turned sideways and has not displayed signs of correction yet amid negative market sentiment. On Thursday, the pair witnessed a firmer rally after overstepping the critical hurdle of 1.3700.
A hawkish commentary from the Bank of Canada (BOC) Governor Tiff Macklem has failed to strengthen the loonie bulls. BOC policymaker sees no slowdown in the pace of hiking interest rates as signs of inflationary easing are unavailable. The message seems ‘loud and clear that investors should brace for bigger rate hikes ahead. Currently, the BOC’s interest rate stands at 3.25% and bigger rate hikes would trim the overall demand in the economy.
In today’s session, Statistics Canada will reveal the employment status for September. Net Change in Employment indicates that the economy would have added 20k jobs vs. the lay-off of 39.7k employees. The Unemployment Rate is seen as stable at 5.4%.
On the oil front, the announcement of sheer production cuts by OPEC+ has infused an adrenaline rush in the black gold. Oil prices have displayed a vertical rally and are expected to hit the immediate hurdle of $90.00. It is worth noting that Canada is a leading exporter of oil to the US and higher oil prices will delight Canada’s fiscal balance sheet.
Meanwhile, the US dollar index (DXY) is awaiting the release of the US Nonfarm Payrolls (NFP) data for more clarity. The payroll data is expected to land at 250k, lower than the prior release of 315k. While the Unemployment Rate is seen as stable at 3.7%. Till the release of the labor market data, a lackluster performance is expected at the counter.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
