USD/CAD juggles above 1.3560 ahead of US/Canada Employment data, oil consolidates
- USD/CAD struggles to find direction as investors seek Canadian employment data for fresh cues.
- A resilient US labor market is likely to support the Fed’s decision of hawkish policy continuation for a longer period.
- Canada’s Employment Change for December is seen lower at 8K against 10.1K released earlier.
The USD/CAD pair is oscillating in a narrow range of 1.3560-1.3580 in the early Asian session. The Loonie asset has turned sideways after a rally from the psychological support of 1.3500. The US Dollar witnessed firmer strength from the market participants after the upbeat United States Automatic Data Processing (ADP) Employment Change data triggered a risk-aversion theme.
The US Dollar Index (DXY) soared to the crucial resistance of 105.00 as accelerating expectations of a secular hawkish monetary policy by the Federal Reserve (Fed) improved the safe-haven’s appeal. Also, it provided support for the 10-year US Treasury yields and pushed them above 3.72%. Meanwhile, S&P500 futures have picked some demand after a sell-off on Thursday, portraying a minor recovery in investors’ risk appetite.
As per the US ADP agency, the United States economy has generated employment for 235K job aspirants against the consensus of 150K. No doubt, firmer labor demand shows strength in an economy but in times of red-hot inflation it provides a meaningful reason to the Fed for avoiding consideration of interest rate cut-approach in the near time.
For more clarity on the status of the US labor market, investors will scrutinize the release of the US Nonfarm Payrolls (NFP) data, which will release on Friday.
Meanwhile, the Canadian Dollar will also display action on the release of the Employment data. According to the estimates, net addition in payrolls for December stands at 8K against 10.1K released earlier. The Unemployment rate may escalate marginally to 5.2%.
On the oil front, the oil price is displaying a rangebound action ahead of the release of the official US Employment data. The black gold could pick strength as the Covid-19 situation might find its peak sooner. It is worth noting that Canada is a leading exporter of oil to the US and higher oil prices support the Canadian Dollar.