USD/CAD retreats from multi-month top, eyes mid-1.3600s ahead of Canadian jobs data – Crypto News – Crypto News
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USD/CAD nosedives from six-week highs, back below 1.3000 USD/CAD nosedives from six-week highs, back below 1.3000

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USD/CAD retreats from multi-month top, eyes mid-1.3600s ahead of Canadian jobs data – Crypto News

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  • USD/CAD drifts lower during the Asian session on Friday amid a modest USD weakness.
  • A combination of factors warrants some caution before positioning for any meaningful slide.
  • Traders now look forward to the monthly Canadian employment details for a fresh impetus.

The USD/CAD pair meets with some supply during the Asian session on Friday and erodes a part of the previous day’s strong gains to 1.3700 neighbourhood, or its highest level since March 28. Spot prices currently trade around the 1.3670-1.3665 region, down 0.10% for the day, though the fundamental backdrop warrants some caution for aggressive bearish traders and positioning for any meaningful corrective slide.

A combination of factors prompts some US Dollar (USD) profit-taking, especially after the recent rally to a six-month peak, which, in turn, is seen exerting some downward pressure on the USD/CAD pair. Retreating US Treasury bond yields, along with signs of stability in the equity markets, weigh on the safe-haven Greenback ahead of China inflation data and G20 leaders summit over the weekend. That said, the prospects for further policy tightening by the Federal Reserve (Fed) should act as a tailwind for the US bond yields and the buck.

In fact, the markets seem convinced that the US central bank will keep interest rates higher for longer and have been pricing in the possibility of one more 25 bps lift-off by the end of this year. Moreover, the incoming stronger US macro data, including the US ISM Services PMI on Wednesday and Thursday’s Weekly Jobless Claims, continues to point to a resilient US economy and should allow the Fed to stick to its hawkish stance. This, along with worries about the worsening economic conditions in China, should limit the downside for the Greenback.

Meanwhile, the Bank of Canada (BoC), though signalled that it could raise borrowing costs again to combat inflation, is expected to be relatively quick to cut rates in the wake of signs that the Canadian economy is cooling rapidly. Furthermore, Crude Oil prices remain under some selling pressure for the second straight day and retreat further from the YTD peak touched on Wednesday. This could undermine the commodity-linked Loonie and lend support to the USD/CAD pair ahead of the monthly Canadian jobs data, due later today.

Technical levels to watch

 

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