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  • Crude oil sell-off weighs on the loonie in the last hours.
  • US Dollar Index recovers a big portion of daily losses.
  • Risk-off mood provides an additional boost.

After staying in a tight range below the 1.29 handle for the majority of the day, the USD/CAD pair gained traction in the American trading hours and rose to a fresh weekly high at 1.2940. As of writing, the pair was trading at 1.2920, adding 0.4%, or 50 pips, on a daily basis.

The pair’s recent bullish momentum seems to be provided by the sharp fall witnessed in crude oil prices. The barrel of West Texas Intermediate, which rallied to its highest level in nearly four years at $76.90 yesterday, reversed its course on Thursday and was last seen down $2 on the day at $74.22. Although it wasn’t clear what triggered the sell-off, the commodities seem to be having a difficult time finding demand as risk-aversion becomes the dominating theme of the markets in the second half of the day.  

On the other hand, following a deep technical correction to 95.55, the US Dollar Index turned north and retraced a big part of its daily downside to suggest that buyers are still in control of the greenback’s price action. At the moment, the DXY is still down 0.2% on the day at 95.80.

Thursday’s macroeconomic data releases from the U.S.

On Friday, markets will be focused on employment reports from Canada, and the U.S. Analysts expect nonfarm payrolls in the U.S. to increase by 185K in September and see the unemployment rate Canada tick down to 5.9% with a 25K increase in the number of employed.

Technical levels to consider

Resistances for the pair align at 1.2940 (daily high), 1.2950 (200-DMA) and 1.3000 (psychological level). On the downside, supports could be seen at 1.2860 (daily low), 1.2780 (Oct. 1 low) and 1.2730 (May 11 low).