- A broad-based USD strength assisted USD/CAD to gain some traction on Friday.
- Strong NFP report further pushed the US bond yields and the greenback higher.
- Bullish oil prices underpinned the loonie and capped the upside for the major.
The USD/CAD pair quickly retreated around 50 pips from weekly tops touched in reaction to stellar NFP print and was last seen trading with modest intraday gains, just below the 1.2700 mark.
The pair built on the previous day’s solid rebound from weekly lows, around the 1.2575 region and gained some follow-through traction on the last trading day of the week. The momentum was exclusively sponsored by the prevalent strong bullish sentiment surrounding the US dollar.
The already stronger greenback got an additional boost after the latest US monthly jobs report showed that the economy added 379K jobs in February. The headline NFP surpassed even the most optimistic estimates and was accompanied by an upward revision of the previous month’s reading.
Adding to this, the unemployment rate ticked lower to 6.2% as against market expectations for a steady print of 6.3%. The data further reinforced prospects for a strong US economic recovery and pushed the yield on the benchmark 10-year bond back above 1.60%, or over one-year tops.
This was seen as another factor that benefitted the greenback. However, the ongoing bullish run in oil prices underpinned the commodity-linked loonie and kept a lid on any further gains for the USD/CAD pair. This, in turn, warrants some caution before placing fresh bullish bets.
Even from a technical perspective, the USD/CAD pair once again failed ahead of the 1.2740-45 supply zone. This further makes it prudent to wait for some follow-through buying beyond the mentioned barrier before positioning for any further near-term appreciating move.
Technical levels to watch
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