USD / CAD flirts with multi-month high, around 1.2830 ahead of US and Canada jobs data
- USD / CAD edged higher on Friday amid a modest recovery in USD demand.
- A further recovery in oil prices could support the loonie and cap the rise.
- Traders now look at the monthly US and Canada employment reports for certain opportunities.
The USD / CAD pair traded near the highest level since September, with the bulls still waiting for a sustained move beyond the 1.2830-35 region.
Following yesterday’s slight decline, the USD / CAD pair caught new bids on the last day of a new week and was supported by the emergence of some US dollar buying. Growing market acceptance that the Fed would take a more aggressive policy response to contain stubbornly high inflation continued to support the bullish sentiment around the greenback.
In fact, investors began to assess a possible take-off in June 2022 after hawkish comments from Fed Chairman Jerome Powell during congressional testimony earlier this week. Powell said the Fed must be prepared to respond to the possibility that inflation may not decline in the second half of 2022. He added that the Fed is likely to accelerate the reduction in its asset purchases.
However, a generally positive risk tone prevented traders from placing aggressive bullish bets around the safe haven USD. On the other hand, a further recovery in crude oil prices, from their lowest level since August 23 reached the previous day, supported the Canadian dollar linked to commodities. This, in turn, could act as a headwind for the USD / CAD pair and cap the upside.
Investors might also prefer to sit on the sidelines and wait for a new catalyst from Friday’s key posts on monthly employment details in the US and Canada. The US Economic Brief also features the ISM Services PMI and influences demand in USD. Apart from this, traders will take inspiration from the dynamics of oil prices for some near term opportunities around the USD / CAD pair.