USD/CAD treads water around 1.2400 as WTI bulls battle USD optimists

USD/CAD remains sidelined around 1.2400 after snapping a two-day uptrend the previous day. Even so, the quote stays around the weekly top as US dollar strength jostles with oil’s upside.

US dollar index (DXY), a gauge of the US dollar versus the six major currencies, jumped to the highest since April 08 during the three-day uptrend on Wednesday, not to forget mentioning the biggest monthly gains in 4.5 years. While chatters over the Federal Reserve’s (Fed) monetary policy adjustments could be cited as offering the background music to the quote, the latest positive data helps the USD buyers of late.

Among them, US ADP Employment, the early signal for Friday’s Nonfarm Payrolls (NFP), gained major attention after beating the 600K forecast with 698K figures for June.

Also backing the US dollar was the risk-off mood that put a safe-haven bid under the greenback. The same could be linked to the rising coronavirus (COVID-19) worries in Asia-Pacific and the hawkish Fedspeak. Recently, Dallas Fed President Robert Kaplan reaffirmed his hawkish stance and said, ''I’d want to taper sooner than the end of the year.''

On the other hand, Canada's GDP recovered in April from -0.8% expected to -0.3%. Though, the monthly growth figures stayed below upwardly revised 1.3% prior. Elsewhere, WTI gained support from a higher than expected inventory draw and the OPEC+ chatters ahead of today’s meeting to regain $74.00, up 0.10% intraday around $73.50 by the press time.

Looking forward, Canada doesn’t have any economics scheduled for publishing but US ISM Manufacturing PMI and weekly Jobless Claims will be the key to follow ahead of Friday’s NFP. Additionally, OPEC+ headlines, covid updates and Fedspeak are extra catalysts to keep a tab on.

Technical analysis

Unless breaking a confluence of 10-DMA and a monthly support line, around 1.2340, even a short-term pullback of the USD/CAD prices becomes doubtful.