USDCAD SIGNAL 06-05-22 : USDCAD down as oil prices rise, holding above 1.2800 ahead of key US/Canadian jobs data.

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USDCAD SIGNAL

USDCAD SIGNAL 06-05-22 : USDCAD down as oil prices rise, holding above 1.2800 ahead of key US/Canadian jobs data.

  • Rising oil prices underpin the loonie and exert pressure amid modest USD weakness.
  • The downside seems cushioned as the focus remains glued to the US/Canadian jobs report.

The USDCAD pair edged lower during the first half of the European session, falling to 1.2815-1.2810 in the last hour, as rising oil prices gave a lift to the Canadian dollar side of the exchange rate.

USDCAD SIGNAL : An impending European Union embargo on Russian oil fueled worries about tightening supply and helped offset concerns about slowing global economic growth. The EU had proposed a plan to phase out Russian oil imports by end of the year. This was seen as a key factor that extended support to crude oil prices.

The USD side of the pair witnessed some profit-taking amid some repositioning trade ahead of Friday’s release of the closely-watched US monthly jobs report – popularly known as NFP. This further exerted some downward pressure on the USD/CAD pair. That said, hawkish Fed expectations and elevated US Treasury bond yields should limit the USD losses.

USDCAD SIGNAL : At Wednesday’s FOMC, Fed Chair Jerome Powell said that policymakers were ready to approve a 50 bps increase at upcoming meetings. Moreover, the markets expect that the Fed would need to take more drastic action to curb soaring and are pricing with an additional 200 bps of rate hikes over the remainder  of 2022. This supports prospects for some USD dip-buying.

Investors might also prefer to wait for a fresh impetus from the release of monthly employment details from the US and Canada, due later during the early North American session. This, along with the US bond yields, will influence the USD. Traders will further take cues from oil price dynamics for some short-term opportunities around the USD/CAD pair.

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