USD/CAD Ignoring Softer Oil

The USD/CAD pair fades bounce off 10-DMA as markets brace for monthly jobs report. Hawkish hopes from the BOC, previous rally in oil prices favor bears.

Russia-Ukraine tussles, firmer US Treasury yields challenge further downside. Canadian employment data may provide another reason for the BOC to extend its rate-hike trajectory.

USD/CAD remains on the back foot for the third successive day, around 1.2770 amid the early initial Asian session on Friday.

In doing so, the Canadian dollar pair sellers remain unaffected by the latest corrective pullback from the 10-DMA, around 1.2750, amid hopes of a strong monthly employment report from Canada.

This helped the Canadian dollar bulls to ignore the recently softer prices of the nation’s key export item, WTI crude oil, as well as broad risk-off mood and stronger US dollar.

That said, the WTI crude oil prices dropped during the last two days, recently around $105.80, while flashing the biggest weekly loss, so far, since November 2021.

Oil’s latest losses could be linked to the global producers’ readiness, including Russia’s, to adhere to output commitments and ease the strain on supplies caused due to geopolitical factors.

A total disappointment from negotiations recently joined news that Russian forces attacked Kharkiv institute that contains an experimental nuclear reactor to weigh on the sentiment.

Furthermore, the ECB’s faster tapering announcement, as well as a fresh 40-year high of the US headline inflation data were additional strains on the market sentiment.

Against this backdrop, Wall Street closed in the red and the US 10-year Treasury yields rose 4.5 basis points (bps) to end the day’s trading around 1.99%. It’s worth noting that S&P 500 Futures print mild losses by the press time.

Moving on, Canada’s February month jobs numbers will be crucial to watch for near-term directions. Headlines Net Employment Change is likely to reverse the previous -200.1K figures with 160K while the Unemployment Rate is expected to ease from 6.5% to 6.2%.

Also important to watch will be the risk catalysts and the US Michigan Consumer Sentiment Index for March, expected 61.3 versus 62.8.

Technically; as the 10-DMA restricts immediate USD/CAD declines around 1.2750, the pair’s rebound towards a two-month-old resistance line near 1.2900 can’t be ruled out.