- USD/CAD rose in reaction to the positive NFP report from the US and the mixed jobs report from Canada.
- The rally in oil prices underpinned the loonie and continued to act as a headwind for the pair.
- Sustained strength beyond the 1.3075-1.3080 barrier is needed to confirm a breakout to the upside.
The pair USD/CAD received new offers during the first hours of the American session and shot up to the daily maximum, around the 1.3035 area, after the publication of the US and Canadian employment report.
The main NFP report showed the US economy added 372,000 jobs in June, down from an increase of 384,000 (revised downward from 390,000) in May. However, this figure far exceeded consensus estimates of 268,000. Furthermore, the unemployment rate remained at 3.6% and reaffirmed expectations of a more aggressive policy by the US central bank. The prospect of a faster rise in interest rates by the Fed caused a sharp rise in US Treasury yields. Apart from this, the softer risk tone continued to lend support to the safe haven US dollar and pushed the USD/CAD pair higher.
By contrast, Canadian statistics reported a 43,200 decline in net employment change, putting some pressure on the domestic currency and providing an additional boost to spot prices. However, the disappointment was offset by the fact that the unemployment rate in Canada fell to 4.9% in June, from 5.1% in the previous month. Additionally, some rally in crude oil prices underpinned the commodity-linked loonie and capped any significant rise in the USD/CAD pair. This, in turn, warrants some caution before placing aggressive bullish bets on the pair.
Therefore, it will be prudent to wait for strong follow-on buying and sustained strength beyond the 1.3075-1.3085 supply zone before positioning for further gains. However, the USD/CAD pair is still on track to end the week on a positive note and could continue to benchmark the US oil price dynamics.
Technical levels
Source: Fx Street
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