- USD/CAD struggled to gain significant traction on Friday and remained confined to a range.
- The USD gained traction for the second day in a row and extended some support to the pair.
- A rebound in oil prices underpinned the loonie and capped gains ahead of the Canadian jobs report.
The pair USD/CAD traded between tepid gains/minor losses during the early European session and was last seen trading near the 1.2770-1.2775 area, almost unchanged on the day.
A combination of divergent forces failed to provide any significant lift to the USD/CAD pair and led to moderate/range-bound price moves on the last day of the week. The US dollar added to the previous day’s US CPI inspired gains and climbed higher for the second day in a row. This, in turn, extended some support to the pair, although a further rise in oil prices underpinned the commodity-linked Canadian dollar and capped the pair’s rise.
The US Bureau of Labor Statistics reported Thursday that US consumer inflation spiked to a new 40-year high in January. Against the backdrop of recent monster gains in commodity prices, the data added to growing market concerns about a big inflationary hit.
This, in turn, reaffirmed bets for an imminent start of Fed policy tightening in March and was seen as a key factor that continued to benefit the greenback.
Apart from this, concerns about the worsening situation in Ukraine, coupled with the risk of a further escalation of tensions between Russia and the West, acted as a tailwind for investment. On the other hand, the Canadian dollar was supported by the appearance of some buying around crude oil prices. This, to a greater extent, offset support factors and kept a cap on any significant upside for the USD/CAD pair, at least for now.
Market participants now look forward to the release of Canada’s monthly employment details, due later in the early American session. This, coupled with the oil price dynamics, should influence the Canadian dollar and give the USD/CAD pair some momentum. Traders will continue to take note of the release of the US Prelim Michigan Consumer Sentiment Index, although the focus will remain glued to new developments surrounding the Russia-Ukraine saga.
Technical levels
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
