- USD/CAD edged higher on Friday amid a modest pickup in the USD demand.
- A further recovery in oil prices could underpin the loonie and cap the upside.
- Traders now eye US/Canadian monthly jobs reports for some opportunities.
The USD/CAD pair was seen trading near the highest level since September, with bulls still awaiting a sustained move beyond the 1.2830-35 region.
Following the previous day's modest downtick, the USD/CAD pair caught fresh bids on the last day of a new week and was supported by the emergence of some US dollar buying. Growing market acceptance that the Fed would adopt a more aggressive policy response to contain stubbornly high inflation remained supportive of the prevalent bullish sentiment surrounding the greenback.
In fact, investors started pricing in an eventual liftoff in June 2022 after Fed Chair Jerome Powell's hawkish comments during the congressional testimony earlier this week. Powell said the Fed needs to be ready to respond to the possibility that inflation may not recede in the second half of 2022. He added that the Fed is likely to speed up the tapering of its asset purchases.
However, a generally positive risk tone held back traders from placing aggressive bullish bets around the safe-haven USD. On the other hand, a further recovery in crude oil prices, from the lowest level since August 23 touched in the previous day, underpinned the commodity-linked Canadian dollar. This, in turn, could act as a headwind for the USD/CAD pair and cap the upside.
Investors might also prefer to move on the sidelines and wait for a fresh catalyst from Friday's key releases of monthly employment details from the US and Canada. The US economic docket also features the ISM Services PMI and influence the USD demand. Apart from this, traders will take cues from oil price dynamics for some short-term opportunities around the USD/CAD pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.