- USD / CAD gains positive traction for the second day in a row on Friday.
- Stronger macroeconomic data from the US revives rumors about the Fed’s phasing out and supports the USD.
- Bullish crude oil prices offer some support to the CAD and could limit the pair’s gains.
- The market focus continues to be on the US NFP and Canadian employment details.
The pair USD / CAD moves slightly higher during the European session on Friday, staying close to the one-week highs around the region of 1.2125-30.
The pair has built on the positive movement of the previous day and has gained some continuation traction for the second day in a row on Friday. The rebound has allowed the USD / CAD pair to move away from multi-year lows, around the key psychological level of 1.2000 touched earlier this week and is due to a modest strength in the US dollar.
The USD has held supported by upbeat US macroeconomic releases on Thursday, which indicated that the US recovery is gathering momentum. Stronger data also fueled speculation that the Fed could advance the timeline to reduce its bond purchases. This, in turn, has driven up US Treasury yields across the board.
Meanwhile, recent events have limited recent optimism, which has been evident in a softer risk tone. This has been seen as another factor that has acted as a tailwind for the safe haven USD. Having said that, the recent upward movement in oil prices has benefited the loonie and could limit the gains of the USD / CAD pair.
Furthermore, investors could also refrain from opening aggressive positions and prefer to wait on the sidelines before Friday’s release of US monthly employment data. The NFP report will be one of the most important economic data that will set the tone for the next FOMC meeting later this month.
Investors will also follow directions from simultaneous release of Canadian employment details. This, together with the dynamics of oil prices, will influence the Canadian dollar and could generate a new directional momentum to the USD / CAD pair.
USD / CAD technical levels
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