- USD / CAD rose modestly on Monday, despite a weak dollar.
- A softer tone around crude prices hurt the loonie.
The USD / CAD pair maintained its modest intraday gains during the first half of the European session, although it was unable to break above and extend the rally above 1.2350.
The par managed to regain some positive traction on the first day of a new trading week and recovered a portion of Friday’s losses led by a mixed US employment report. A softer tone around oil prices gave support to the USD / CAD pair, while a general weakness of the dollar limited the advance.
The UAE continues to block an agreement in the Organization of the Petroleum Exporting Countries and allies, to increase production by about 2 million barrels per day from August to December 2021 and to extend the remaining production cuts until the end of 2022. This was a headwind for oil ahead of the next OPEC + meeting, to take place on Monday. This, in turn, was seen as one of the key factors that provided a modest boost to the USD / CAD.
Meanwhile, an unexpected rise in the unemployment rate in the United States to 5.9% largely offset the rise in nonfarm payrolls of 850,000 jobs in June. This helped calm market fears of an interest rate hike by the Federal Reserve, ahead of schedule. The dollar after this weakened and is still in this way, limiting the advance of the USD / CAD.
The break of 1.2350 could prop up the bullish bias, while in the opposite direction, strong support for the next few hours appears at 1.2300 / 05. A day of limited volume is expected ahead as a result of the US holiday. On Tuesday, activity would return to normal and on Wednesday the minutes of the last meeting of the Federal Reserve will be published.
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