- USD / CAD consolidated in a range close to multi-week lows on the last day of the week.
- Rising oil prices supported the Canadian dollar and limited the rise amid subdued demand for the US dollar.
- The rally in US bond yields acted as a tailwind for the USD and helped limit losses for the majors.
- Investors also seemed reluctant to make aggressive bets ahead of the US and Canadian employment data.
The pair USD / CAD it remained on the defensive during the first half of the European session and was last seen hovering around the four-week lows, just below 1.2550.
The recent run up in crude oil prices, to the highest level since November 2014, continued to benefit the commodity-linked Canadian dollar and acted as a headwind for the USD / CAD pair. On the other hand, the US dollar consolidated in a range and did little to impress bull traders or give the pair some boost.
That said, the recovery in US Treasury yields, amid prospects for an early policy tightening by the Fed, helped limit any significant USD decline. This, in turn, was seen as a key factor preventing traders from placing aggressive bearish bets around the USD / CAD pair and led to moderate / range-limited price action on the last day of the week.
Investors appear to be convinced that the Fed will soon begin to reduce its bond purchases and raise interest rates in 2022. Aside from this, concerns that the recent surge in crude oil and energy prices will fuel inflation fueled inflation. the yield on the 10-year US government benchmark bond. to four-month highs, around the 1.60% level on Friday.
Market participants are now awaiting the release of monthly employment figures that are closely followed in the US and Canada. The popularly known NFP report will determine the Fed’s next policy move and boost the dollar in the near term. On the other hand, Canadian employment data would offer clues as to the strength of the national economy. This, coupled with oil price dynamics, will influence the loonie and provide further directional momentum to the USD / CAD pair.
Technical levels
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