- USD/CAD remains under intense selling pressure for the third day in a row on Friday.
- Dollar weakness is the main bearish factor on Friday.
- At 12:30 GMT the Canadian employment report will be published.
USD/CAD extends this week’s sharp pullback from levels just above 1.3200 and remains under intense selling pressure for the third day in a row on Friday. The sharp intraday decline took the pair down to 1.2980, the lowest since August 30th. In the previous Canadian employment report, it operates in the 1.3000 zone.
US dollar falls sharply
Oil prices are regaining ground contributing to the decline in USD/CAD. The main factors are the weakness of the dollar and the good mood of the market. The dollar index, which measures the dollar’s performance against a basket of currencies, retreated further from two-decade highs hit earlier this week and sank to a new monthly low. This despite the fact that expectations that the Federal Reserve will continue to tighten its monetary policy at a rapid pace are firm.
The implied odds of a 75 basis point Fed rate hike in September now stand at 85%. Bets were bolstered by hawkish comments from Fed Chairman Jerome Powell, who reiterated the central bank’s firm commitment to curbing inflation. This remains supportive of elevated US Treasury yields and should act as a tailwind for the dollar.
Market participants now await the release of Canada’s monthly employment figures, due at 12:30 GMT. A positive net change in employment of 15,000 is expected.
Technical levels
Source: Fx Street
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