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  • USD/CAD looks for a firm direction after posting the heaviest gains in five weeks.
  • The pre-NFP trading lull supersedes WTI losses, US-China tension.
  • Forecasts suggest another leg of the south-run but bears are worried amid the US dollar’s latest pullback and mixed data from America.

USD/CAD eases to 1.3125 during the pre-European trading on Friday. The Loonie pair marked the biggest run-up since July 30 the previous day. Though, the cautious mood of the traders ahead of the key employment data from the US and Canada limits the quote’s moves.

Other than the pre-data trading lull, mixed signals from the key risk catalysts and commodity prices also weigh on the pair’s recent performance.

The US dollar’s refrain from turning down the three-day winning streak joins downbeat WTI prices to keep the pair buyers hopeful.

On the other hand, the comparatively stronger fundamentals of the Canadian economy, trade numbers being the latest, join the Sino-American tension and Wall Street’s tech rout to tame the pairs’ upside attempts.

Against this backdrop, the market sentiment also struggles for a clear direction even as Asian stocks are up for the biggest weekly losses since April. The reason could be traced from the US 10-year Treasury yields near two basis points of a gain to 0.65% by the press time. In doing so, the American bonds seem to ignore China’s warnings of cutting their demand for the US debt.

Nothing will be important than the August month’s employment data for the US and Canada, up for publishing at 12:30 GMT.

The headline US Nonfarm Payrolls (NFP) are expected to recede to 1400K versus 1763K prior whereas the Unemployment Rate may recede from 10.2% previous to 9.8%.

Read: Nonfarm Payrolls Preview: Fed’s policy shift to introduce vital noise

Alternatively, the Canadian Unemployment Rate could drop to 10.1% from 109% prior while the Net Change in Employment could drop to 275K versus 418.5K previous readouts.

Read: Canadian Jobs Preview: Sub 10% unemployment rate could trigger loonie’s next leap

Technical analysis

Given the pair’s daily closing beyond a downward sloping trend line from August 10 and 10-day SMA, coupled with the strongest MACD histogram since July 17, the buyers are likely to keep the reins while targeting a 21-day SMA level of 1.3186 during the further upside. Meanwhile, a daily closing below 10-day SMA, at 1.3119 now, can please sellers with the 1.3100 threshold.

 

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