USD/CAD sees upside above 1.2950 on jobs data divergence, US Inflation eyed

The USD/CAD pair is gearing up for a decent upside move and surpass of the critical hurdle of 1.2950 will be crucial for the greenback bulls.  The asset has shifted into an inventory distribution process after an upside break of the prolonged consolidation in a 1.2767-1.2911 range. The pair is going to add decent gains ahead after a divergence in US/Canada labor market data.

The US Nonfarm Payrolls (NFP) landed at 528k, significantly higher than the expectations of 250k and the prior release of 372k. Investors were expecting that commentary from US corporate players citing a halt in the recruitment process will result in lower employment generation and will put more pressure on the Federal Reserve (Fed) for not hiking rates dramatically. The Unemployment Rate has trimmed to 3.5% against expectations and the former print of 3.6%.

On the loonie front, the economy has disclosed a continuation of job loss. The economic data landed a -30.6k vs. 43.2k. Also, the jobless rate has remained unchanged at 4.9%. A vulnerable labor data has weakened the Canadian dollar against the greenback.  

Going forward, the US Consumer Price Index (CPI) data will be of utmost importance. The annual inflation figure is likely to remain lower at 8.7% against the prior release of 9.1%. Oil prices have remained in a negative trajectory in July, which might be the critical factor for a decent slippage in the price rise index. While the US CPI that doesn’t include volatile food and oil prices may improve to 6.1% from the prior print of 5.9%.