- A combination of factors assisted USD/CAD to regain some traction on Friday.
- A sharp fall in oil prices undermined the loonie and extended some support.
- The risk-off mood benefitted the safe-haven USD and provided a further lift.
The USD/CAD pair refreshed daily tops, around the 1.3330 region in the last hour, reversing the previous day’s losses to over one-week lows.
The pair stalled this week’s retracement slide from the 1.3420 region, or two-month tops and caught some fresh bids on the last trading day of the week, snapping two consecutive days of the losing streak. The uptick was sponsored by a combination of factors – the emergence of some fresh US dollar buying and a sharp fall in crude oil prices, which tends to undermine the commodity-linked loonie.
The greenback was back in demand amid a fresh wave of the global risk aversion trade – as depicted by a selloff in the US equity markets. The global risk sentiment took a hit on the back of the impasse over the next round of the US fiscal stimulus plans. The already weaker market mood was further hit after the US President Donald Trump was tested positive for the highly contagious coronavirus disease.
Meanwhile, fears about worsening demand without more support for the economy continued weighing on crude oil prices, which fell over 3% on Friday and remain on track to post the second consecutive week of decline. Oil prices were further pressured by increasing supplies from the OPEC in September, mainly as a result of more supply from Libya and Iran.
The uptick, however, lacked any strong follow-through as investors now seemed reluctant to place any aggressive bets ahead of the closely watched US monthly jobs report, due later during the early North American session. The headline NFP is expected to show that the US economy added 850K new jobs in September, down from 1.37 million in the previous month, while the unemployment rate is expected to have ticked down to 8.2% from 8.4%.
Technical levels to watch
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