USD/CAD retreats towards 1.3800 as Oil bears take a breather, US/Canada employment data eyed
- USD/CAD pares the biggest weekly gains since late September, snaps four-day uptrend with mild losses.
- BoC’s Rogers terms the latest rate hike pause as conditional but failed to impress Loonie buyers amid downbeat Oil price.
- WTI remains sidelined around a fortnight low after declining in the last three consecutive days.
- US NFP, Canada Employment Change for February will be crucial amid BoC vs. Fed tussle.
USD/CAD dribbles around 1.3830-20 as bulls catch a break around the highest levels since late October 2022 after a four-day uptrend. In doing so, the Loonie pair portrays the market’s anxiety ahead of the key employment data from the US and Canada while also justifying a pause in the WTI crude oil’s fall, due to Ottawa’s reliance on Oil as the key export item.
The Loonie pair rose in the last four consecutive days as the monetary policy divergence between the Bank of Canada (BoC) and the Federal Reserve (Fed) joins downbeat Oil price. Adding strength to the pair’s upside momentum could be the broad US Dollar strength, ignoring the latest retreat, during the uncertain times.
On Thursday, Bank of Canada Senior Deputy Governor Carolyn Rogers signaled that the Canadian central bank’s latest pause in the interest rate hikes is a conditional one. The policymaker added, “If economic developments unfold as we projected and inflation comes down as quickly as we forecast in the January Monetary Policy Report (MPR), then we shouldn’t need to raise rates further. But if evidence accumulates suggesting inflation may not decline in line with our forecast, we’re prepared to do more.”
Elsewhere, mixed employment clues from the US probed the US Dollar bulls ahead of the key jobs report. That said, US Initial Jobless Claims marked the biggest jump since January by rising to 211K for the week ended on March 03 versus 195K expected and 190K prior. Additionally, the Challenger Job Cuts were down and the Continuing Jobless Claims were up.
It should be noted that fears emanating from softer China inflation data and US President Joe Biden’s proposal tax hike exert downside pressure on the market sentiment and the Oil price. With this, the WTI crude oil dropped to a two-week low during the three-day losing streak, before making rounds to $75.70.
Amid these plays, the USD/CAD pair appears indecisive but the bears are likely firming their grips with hopes of witnessing negative surprise from the US data. However, market consensus for the Canadian jobs report for February also appears less optimistic and hence the Loonie pair traders should remain cautious ahead of the all-important releases.
Also read: Nonfarm Payrolls Preview: Five scenarios for the Fed, USD and stocks reactions, with probabilities
Technical analysis
A daily closing beyond the 1.3800 hurdle, encompassing multiple levels marked during late September-October 2022, keeps the USD/CAD buyers hopeful of challenging the previous yearly top surrounding .3980.