USD/CAD declines towards 1.3450 amid upbeat market mood, US/Canada Employment eyed
- USD/CAD has exposed to drop to near 1.3450 amid weak US Treasury yields.
- Investors will keep an eye on US/Canada Employment data for fresh cues.
- Oil prices drop below $74.00 amid short-term pain in China’s prospects due to rising Covid cases.
The USD/CAD pair has surrendered the crucial support of 1.3486 in the Asian session after a vertical sell-off from above 1.3650 on Wednesday. The downside pressure in the Loonie asset is bolstering the expression of extension in the south-side journey towards 1.3450 ahead. The US Dollar witnessed a steep fall following the footprints of weaker US Treasury yields.
Investors’ risk appetite has improved dramatically after the release of the downbeat United States ISM Manufacturing PMI. S&P500 witnessed demand from the market participants as various factors are now signaling for further inflation softening ahead.
The US Dollar Index (DXY) reacted less to the release of the Federal Open Market Committee (FOMC) minutes as it seems it was already discounted. None of the Federal Reserve (Fed) policymakers voted against the decision of easing the pace of interest rate hike to 50 basis points (bps) amid evidence of a slowdown in the Consumer Price Index (CPI).
Going forward, investors will focus on the release of the US Nonfarm Payrolls (NFP) data, which will release on Friday. As per the consensus, the United States economy added 200K fresh jobs in December vs. the former release of 263K. The Unemployment Rate is likely to remain steady at 3.7%. Apart from that, the Average Hourly Earnings could drop to 5.0% from 5.1% released earlier.
Meanwhile, the Canadian Dollar will also dance to the tunes of Employment data. According to the estimates, net addition in payrolls for December stands at 8K against 10.1K released earlier. The jobless rate will escalate marginally to 5.2%.
On the oil front, oil prices have dropped further below $74.00 as short-term pain in China’s economic prospects led by accelerating Covid infections is hurting oil demand prospects. It is worth noting that Canada is a leading exporter of oil to the United States and lower oil prices could weaken the Canadian Dollar.