USD/CAD languishes near multi-week low, eyes Canadian jobs data for fresh impetus
- USD/CAD remains depressed for the fifth straight day ahead of the Canadian jobs data.
- Rising Oil prices underpin the Loonie and weigh on the pair amid a modest USD slide.
- Spot prices seem poised to register weekly losses for the first time in the previous four.
The USD/CAD pair remains under some selling pressure for the fifth straight day and is weighed down by a combination of factors. Spot prices trade around the 1.3725 region during the early European session, just above a nearly three-week low touched on Wednesday.
Crude Oil prices trade with a positive bias for the third straight day and remain on track to register a weekly gain of more than 3% amid easing demand concerns and fears of a widening Middle East conflict. This, in turn, underpins the commodity-linked Loonie, which, along with the emergence of some US Dollar (USD) selling, acts as a headwind for the USD/CAD pair.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, retreats further from the weekly top touched on Thursday amid a fresh leg down in the US Treasury bond yields, led by bets for bigger rate cuts by the Federal Reserve (Fed). Apart from this, a generally positive tone across the global equity markets further dents demand for the safe-haven buck.
The aforementioned fundamental backdrop suggests that the path of least resistance for the USD/CAD pair is to the downside, though traders might prefer to wait for the release of the monthly Canadian employment details before placing fresh bets. The key jobs report will influence the Canadian Dollar (CAD) and provide some meaningful impetus to the USD/CAD pair.
Apart from this, the USD and Oil price dynamics should contribute to producing short-term trading opportunities on the last day of the week. The market focus will then shift to the latest US consumer inflation figures, due next Wednesday, which will play a key role in determining the Fed's future policy decision and drive the USD demand in the near term.
Economic Indicator
Net Change in Employment
The Net Change in Employment released by Statistics Canada is a measure of the change in the number of people in employment in Canada. Generally speaking, a rise in this indicator has positive implications for consumer spending and indicates economic growth. Therefore, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.
Read more.Next release: Fri Aug 09, 2024 12:30
Frequency: Monthly
Consensus: 22.5K
Previous: -1.4K
Source: Statistics Canada
Canada’s labor market statistics tend to have a significant impact on the Canadian dollar, with the Employment Change figure carrying most of the weight. There is a significant correlation between the amount of people working and consumption, which impacts inflation and the Bank of Canada’s rate decisions, in turn moving the C$. Actual figures beating consensus tend to be CAD bullish, with currency markets usually reacting steadily and consistently in response to the publication.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
