USD/CAD remains on the defensive below 1.3400, investors await US NFP data

The USD/CAD pair remains on the defensive below the 1.3400 mark during the early Asian trading hours on Friday. The pair snaps a four-week winning streak as the US Dollar (USD) loses its recovery momentum and drops to 103.00. Traders await the US Nonfarm Payrolls (NFP) report for January. This event might trigger the volatility in the market. USD/CAD currently trades near 1.3376, down 0.09% on the day. 

Data released on Thursday revealed that the US Manufacturing Purchasing Managers' Index (PMI) improved sharply in January. The US ISM Manufacturing PMI came in at 49.1 versus 47.1, beating the market expectation of 47.0. The overall growth was mainly driven by renewed growth in new orders and a slowdown in production contraction. The upbeat Manufacturing PMI figure failed to lift the Greenback as traders digested the information from the January Fed meeting. 

On Thursday, the Canadian S&P Global Manufacturing PMI improved to 48.3 in January from the previous reading of 45.4. Earlier this week, the nation’s real Gross Domestic Product (GDP) expanded by 0.2% in November. The growth numbers indicated a resilience in the Canadian economy and could take the pressure off the Bank of Canada (BoC) to cut interest rates. Meanwhile, a decline in oil prices might weigh on the commodity-linked Loonie as Canada is the largest oil exporter to the United States. 

Market participants will closely monitor the US labor market data on Friday. The US Nonfarm Payrolls (NFP) is estimated to see 185k job additions in January. The Unemployment Rate is expected to rise to 3.8%, and finally, the Average Hourly Earnings are projected to show an increase of 0.3% MoM. Also, the US Factory Orders and the final reading of the Michigan Consumer Sentiment will be due. Traders will take cues from these figures and find trading opportunities around the USD/CAD pair.