- USD/CAD is clinging to small daily gains above 1.3050.
- Falling crude oil prices weigh on commodity-sensitive loonie.
- Investors shift their focus to jobs data from US and Canada.
The USD/CAD pair dropped to its lowest level in more than two months at 1.3026 on Thursday and seems to have gone into a consolidation phase ahead of key labour market data from the US. As of writing, the pair was up 0.12% on the day at 1.3063.
USD selloff remains intact
The upbeat market mood caused the greenback to suffer heavy losses against its major rivals this week. With results from swing states suggesting former Vice President Joe Biden remains on track to beat President Donald Trump in the presidential race, risk flows dominated markets throughout the week.
The US Dollar Index, which spiked to a five-week high of 94.30 on Wednesday, fell sharply in the second half of the week and is currently sitting at its lowest level since early September at 93.35, losing 0.3% on a daily basis.
Meanwhile, FOMC Chairman Jerome Powell’s dovish tone on Thursday post additional weight on the USD’s shoulders. Commenting on Powell’s remarks, “we expect the case for more accommodation to build as employment growth, and the economy broadly slows in the months ahead,” said TD Securities analysts. “Powell’s focus on COVID-19 and more fiscal stimulus need highlight some of the tactical concern in chasing a weaker USD from current levels.”
Fed: Powell’s inclination to additional stimulus is another bout of bad news for USD – TDS.
On the other hand, crude oil prices are falling for the second straight day on Friday, allowing USD/CAD stay in the positive territory by making it tough for the commodity-sensitive CAD to find demand. At the moment, the barrel of West Texas Intermediate (WTI) is down 2.75% on the day at $37.45.
In the early trading hours of the American session, the US Bureau of Labor Statistics will release the Nonfarm Payrolls report for October. Markets expect the NFP to arrive at +600K. A better-than-expected reading could provide a boost and cause the USD to end the week on a weak note.
Technical levels to watch for
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