USD/CAD trades with modest losses, below 1.3400 mark ahead of US/Canadian jobs report

• USD/CAD comes under some fresh selling on Friday amid persistent USD weakness.
• Collapsing US bond yields, Fed rate cut speculations continue to weigh on the USD.
• Weaker oil prices undermined the loonie and helped limit losses ahead of jobs data.

The USD/CAD pair refreshed daily lows, around the 1.3385 region during the early European session and has now erased the previous session’s positive move.

The pair extended the overnight late pullback from the 1.3440 supply zone, or weekly tops, and witnessed some follow-through selling on the last trading day of the week. Persistent US dollar weakness, amid a plunge in the US Treasury bond yields, was seen as one of the key factors exerting some pressure on the major.

Investors likely to wait for a fresh catalyst

The coronavirus-led selloff across global equity markets forced investors to take refuge in the so-called “safe-haven” assets, including the US Treasuries. This coupled with expectations that the Fed will again cut interest rates by another 50 bps on March 18 dragged the US bond yields to fresh record lows on Friday.

Meanwhile, reports that OPEC ministers have decided to cut oil output by 1.5 million barrels per day failed to lift oil prices, which lost around 1.5% on Friday. Weaker sentiment around the oil market undermined the commodity-linked currency – the loonie – and might help limit deeper losses, at least for the time being.

Investors might also be reluctant to place any aggressive bets, rather prefer to wait on the sidelines ahead of Friday’s important release of the monthly employment reports from the US (NFP) and Canada. This coupled with the outcome of the OPEC+ meeting will play a key role in determining the pair’s next near-term direction.

Technical levels to watch