USD/CAD jumps towards 1.2750, awaiting the US NFP report.

  • USD/CAD gained strong positive traction on Friday and was supported by a large USD rally.
  • The worsening situation in Ukraine benefited the safe haven USD and kept it supported.
  • A rally in crude oil prices did little to support the loonie or hinder intraday upside.
  • Traders are eyeing the US NFP report for some momentum, although the focus remains on the Ukraine crisis.

The pair USD/CAD rose during the middle of the European session and rose to a multi-day high around 1.2750 in the last hour.

The pair built on the solid bounce overnight from the lowest level since Jan 26 around the 1.2585 area and gained strong follow-up traction for the second day in a row on Friday. The boost was sponsored solely by a strong rally in the US dollar and did not appear to be affected by a rebound in crude oil prices, which tend to support the commodity-linked Canadian dollar.

The Russian attack on Ukraine’s Zaporizhzhia nuclear power plant, the largest of its kind in Europe, unsettled investors and triggered a new wave of risk-averse global trading. The blitz sparked fears of an environmental catastrophe and boosted demand for traditional safe-haven assets, which, in turn, pushed the dollar to the highest level since June 2020.

The worsening situation in Ukraine further fueled concerns about the disruption of Russian crude exports and acted as a tailwind for oil prices. That said, the prospect of more Iranian supplies in the event of a nuclear deal acted as a headwind for black gold. This, however, did not support the loonie nor hamper the strong intraday move higher in the USD/CAD pair.

Market participants are now eagerly awaiting the monthly US jobs report, popularly known as the NFP, to be released during the early American session. A significant divergence from the expected readings could give the USD/CAD pair a lift. However, reaction is likely to remain limited as focus remains glued to developments surrounding the Russia-Ukraine saga.

Technical levels

Source: Fx Street

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