- USD / CAD advances on Friday and extends the move beyond the 100-day SMA.
- The optimistic expectations of the Fed continue to prop up the USD and offer some support to the pair.
- The rally appears limited amid rising oil prices and ahead of America’s monthly NFP jobs report.
The pair USD / CAD has moved with a slight positive bias at the start of the European session on Friday and has approached two-week highs, just below 1.2450.
The US dollar has held firm near three-month highs amid speculation that the Fed will tighten its monetary policy sooner if price pressures continue to intensify. Market expectations were further fueled by Wednesday’s US ISM Manufacturing PMI survey, which showed prices paid jumped to a record 92.1. This, in turn, was seen as a key factor that extended some support to the USD / CAD pair.
In the meantime, a subdued action around crude oil prices has done little to influence the CAD, currency pegged to commodities, or provide any significant boost to the USD / CAD pair. In fact, WTI consolidated just below the highest level since October 2018, touched on Thursday. after a disagreement within OPEC + delayed a decision on production levels. Investors now hope that the stagnation could end OPEC + not increasing production at all.
Having said that, a further decline in US Treasury yields prevented the USD bulls from opening aggressive positions and could limit any further gains for the USD / CAD pair. Investors also seemed reluctant and prefer to wait on the sidelines ahead of the release of monthly U.S. employment data on Friday. The NFP report could influence the Fed’s political outlook and boost the USD in the near term.
Apart from this, the news coming out of the OPEC + meeting could instill some volatility in the oil market. This, in turn, could contribute to generating some significant business opportunities. Meanwhile, the USD / CAD pair is more likely to extend its sideways consolidation price above the 100-day SMA.
Technical levels to observe
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