USDCAD SIGNAL 04-03-22 : USDCAD gained strong positive traction on Friday and was supported by a blowout USD rally.
- The worsening situation in Ukraine benefitted the safe-haven USD and remained supportive.
- An uptick in crude oil prices did little to underpin the loonie or hinder the intraday move up.
- Traders eye US NFP report for some impetus, though the focus remains on the Ukraine crisis.
The USDCAD pair scaled higher through the mid-European session and climbed to a multi-day high, around mid-1.2700s in the last hour.
USDCAD SIGNAL : The pair built on the overnight solid bounce from the lowest level since January 26, around the 1.2585 region and gained strong follow-through traction for the second successive day on Friday. The momentum was exclusively sponsored by a blowout US dollar rally and seemed rather unaffected by an uptick in crude oil prices, which tend to underpin the commodity-linked loonie.
The Russian attack on Ukraine’s Zaporizhzhia nuclear power plant – the largest of its kind in Europe – unnerved investors and triggered a fresh wave of the global risk-aversion trade. The bombardment raised fears of an environmental catastrophe and boosted demand for traditional safe-haven assets, which, in turn, pushed the greenback to the highest level since June 2020.
USDCAD SIGNAL : The worsening situation in Ukraine further fueled concerns about disruption to Russian crude exports and acted as a tailwind for oil prices. That said, prospects for more Iranian supplies in the event of a nuclear deal acted as a headwind for the black gold. This, however, failed to lend support to the Canadian dollar or hinder the USD/CAD pair’s strong intraday move up.
Market participants now look forward to the US monthly jobs report, popularly known as NFP, due for release during the early North American session. A significant divergence from the expected readings might provide some impetus to the USD/CAD pair. The reaction, however, is likely to remain limited as the focus remains glued to developments surrounding the Russia-Ukraine saga.
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