USDCAD bulls flirt with 1.3750 ahead of US/Canada Employment data

• USDCAD steadies around two-week top, probes six-day uptrend.
• Firmer yields, risk aversion underpinned US dollar but mixed US data tests DXY bulls.
• Cautious mood ahead of the key statistics may restrict the pair’s immediate moves.
• Hawkish Fed, sour sentiment and firmer yields could favor bulls, NFP is the key.

USDCAD remains sidelined around 1.3745, after refreshing the fortnight high, as traders await crucial employment data from the US and Canada during early Friday. The Loonie pair rose for the six consecutive days in the past before the latest inaction around the multi-day top. That said, the market’s rush for risk safety and softer prices of Canada’s key export, the Crude Oil, appeared to have favored the quote’s latest upside.

WTI crude oil prices dropped nearly 1.7% to $87.98 by the end of Thursday’s North American session, trading nearby by the press time, as fears of recession amplify as the major central banks keep fueling the benchmark rates. Also weighing on the black gold prices could be the covid woes from China and the latest headlines suggesting the Group of Seven (G7) has agreed to put a cap on Russian oil prices.

Elsewhere, the US Dollar Index (DXY) extended its post-Fed run-up towards refreshing the highest levels in two weeks. Increased risk aversion amid fears of higher rates and economic slowdown, as conveyed by policymakers of from the Bank of England (BOE) and the European Central Bank (ECB), appears the key catalyst for the greenback’s latest run-up. On the same line could be the firmer yields. However, mixed US data seemed to have probed the DXY bulls ahead of the all-important US Nonfarm Payrolls (NFP).

US ISM Services PMI for October dropped to 54.4 from 56.7 prior and 55.5 market consensus. However, the Factory Orders matched 0.3% forecast versus 0.2% upwardly revised previous readings. It should be noted that the US S&P Global Composite PMI and Services PMI got an upward revision from their preliminary readings for the stated month whereas the Initial Jobless Claims eased to 217K for the week ended on October 28 versus 220K expected and 218K prior.

Also read: US October Nonfarm Payrolls Preview: Analyzing gold's reaction to NFP surprises

Technical analysis

A successful trading beyond the three-week-old resistance line, now support around 1.3650, keeps the USDCAD pair buyers hopeful of visiting the yearly high surrounding 1.3980.