|

USD/CAD sits near multi-week top, above mid-1.3300s as traders await US/Canadian jobs data

  • USD/CAD consolidates its recent strong gains to the highest level since June 13.
  • Bullish Oil prices underpins the Loonie and caps the upside amid a softer USD.
  • Bets for more Fed rate hikes act as a tailwind ahead of US/Canadian jobs data.

The USD/CAD pair enters a bullish consolidation phase and oscillates in a narrow range, just below its highest level since June 13 touched during the Asian session on Friday. Spot prices currently hovers around the 1.3360-1.3365 region, nearly unchanged for the day, as traders keenly await the release of the crucial monthly employment details from the US and Canada.

The Canadian jobs data, however, is more likely to be overshadowed by the closely-watched US NFP report, which could influence the Federal Reserve's (Fed) policy outlook and drive the US Dollar (USD) demand. In the meantime, the uncertainty over the Fed's future rate-hike path keeps the USD bulls on the defensive. Apart from this, the recent bullish run in Crude Oil prices is seen underpinning the commodity-linked Loonie and acting as a headwind for the USD/CAD pair.

The minutes from the June FOMC meeting released on Wednesday revealed that almost all members supported resuming rate hikes as inflation remains unacceptably high. Moreover, Thursday's upbeat US ADP report and the ISM Services PMI reaffirmed bets for a 25 bps lift-off at the July FOMC meeting. That said, the Prices Paid sub-component of the ISM survey fell to a more than two-year low and fueled speculations that the Fed will soften its hawkish stance sooner rather than later.

Crude Oil prices, meanwhile, hold steady near a two-week high touched on Thursday and remain well supported by a larger-than-expected fall in US inventories last week, which pointed to strong refining demand. This comes on after top Oil exporters - Saudi Arabia and Russia - announced a fresh round of output cuts for August and continues to act as a tailwind for the black liquid. That said, worries about a deeper global economic downturn, particularly in China, might cap gains.

Furthermore, the prospects for more interest rate hikes by the Fed remain supportive of elevated US Treasury bond yields, which is seen acting as tailwind for the USD and should lend some support to the USD/CAD pair. In fact, the yield on the two-year US government bond, which typically moves in step with interest rate expectations, is placed near its highest since June 2007, while the benchmark 10-year US Treasury yield is holding steady above the 4.0% threshold.

Nevertheless, the USD/CAD pair remains on track to end in the green for the second successive week and the aforementioned fundamental backdrop favours the USD bulls. That said, it will still be prudent to wait for some follow-through buying before traders start positioning for an extension of the recent strong recovery from the 1.3115 region, or the lowest level since September 2022 touhced last Tuesday.

Technical levels to watch

USD/CAD

Overview
Today last price1.3362
Today Daily Change-0.0006
Today Daily Change %-0.04
Today daily open1.3368
 
Trends
Daily SMA201.3247
Daily SMA501.3397
Daily SMA1001.3491
Daily SMA2001.3506
 
Levels
Previous Daily High1.3373
Previous Daily Low1.3275
Previous Weekly High1.3285
Previous Weekly Low1.3117
Previous Monthly High1.3585
Previous Monthly Low1.3117
Daily Fibonacci 38.2%1.3335
Daily Fibonacci 61.8%1.3312
Daily Pivot Point S11.3304
Daily Pivot Point S21.3241
Daily Pivot Point S31.3207
Daily Pivot Point R11.3402
Daily Pivot Point R21.3436
Daily Pivot Point R31.3499

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

More from Haresh Menghani
Share:

Editor's Picks

GBP/USD remains offered below 1.3600

GBP/USD resumes its decline, reversing Tuesday’s bullish attempt and breaking below 1.3600 the figure on Wednesday. Cable’s marked pullback follows a firm advance in the Greenback as investors continue to assess latest US data as well as the geopolitical landscape.

EUR/USD remains on the back foot around 1.1650

EUR/USD comes under renewed selling interest, slipping back to the mid-1.1600s ahead of the opening bell in Asia. Spot loses momentum on the back of solid gains in the US Dollar in a context of unabated geopolitical tensions and steady caution ahead of key US data releases and Chair Warsh’s speech at the Jackson Hole Symposium on Friday. Looking ahead, the ECB will publish its Accounts on Thursday.

Gold puts $4,600 to the test amid USD gains

Gold now faces some renewed downside pressure and seems to challenge the key $4,600 mark per troy ounce on Wednesday. That said, the yellow metal’s correction comes after three daily upticks in a row, fading at the same time the recent move to fresh tops around $4,700. The stronger US Dollar and a decent rebound in US Treasury yields across the curve continue to weigh on bullion.

Bitcoin vs Gold Price Prediction: Rally cools as US PCE inflation holds steady
Bitcoin (BTC) is edging lower, trading slightly above $78,000 on Wednesday. This correction comes after last week’s rally and the subsequent rejection around $81,000. The decline reflects cooling sentiment amid overheated market conditions and increased profit-taking.
Nvidia: How will the company perform as its switches from a chip maker to an AI finance house?

The main event for markets this week takes place this evening, after US markets close. Nvidia, the AI giant, will report results for last quarter. Another monster report is expected. Revenues could come in above $92bn, and earnings per share could come in at $2.09.

Kevin Warsh’s Jackson Hole dilemma: Say too much, too little, or just enough

Kevin Warsh is preparing to deliver his first Jackson Hole speech as Federal Reserve (Fed) Chair on Friday, and expectations extend well beyond whether interest rates will be raised or left unchanged in September.