- A broad-based USD strength helped the USD / CAD gain some traction on Friday.
- NFP’s strong report further pushed US bond yields and the dollar higher.
- Rising oil prices supported the loonie and limited the pair’s rise.
The pair USD / CAD It quickly retraced around 50 pips from weekly highs touched in reaction to the stellar NFP report and was last seen trading modest intraday gains, just below 1.2700.
The pair built on the previous day’s solid bounce from weekly lows around the 1.2575 region and gained some traction on the last trading day of the week. The momentum was solely sponsored by the strong bullish sentiment prevailing around the US dollar.
The already stronger dollar received an additional boost after the latest monthly US employment report showed the economy added 379,000 jobs in February. The NFP figures beat even the most optimistic estimates and was accompanied by an upward revision from the previous month’s reading.
Added to this, the unemployment rate dropped to 6.2% compared to market expectations of 6.3%. The data further bolstered the prospects for a strong US economic recovery and pushed the benchmark 10-year bond yield above 1.60%, or above its one-year high.
This was seen as another factor that benefited the dollar. However, the continued bull run in oil prices sustained the Canadian dollar pegged to commodities and kept any further gains for the USD / CAD pair in check. This, in turn, warrants some caution before placing new bullish bets.
Even from a technical perspective, the USD / CAD pair again failed to break above the 1.2740-45 bid zone. This makes it more prudent to wait for some subsequent purchases beyond the aforementioned barrier before positioning for any further appreciation movements in the short term.