October 7, 2022 17:04:25
The Canadian dollar reverses its early losses against the US dollar for the past few sessions. The U.S dollar index (DXY) downside momentum paused and held its advance above 112.0 on Friday. As per the latest job data the market kept the hope of the continuation of a hawkish tone from the Bank of Canada.
The Canadian economy added 211k jobs in September, higher than market expectations of 200k. This is the first rise in employment since May. Further, the Unemployment rate eased to 5.2% in September from 5.4% in the previous month.
On a similar tone, the US Nonfarm payroll data also added more than expected jobs in the economy. The recent data suggests the addition of 263k jobs in September, much above the market expectations of 250K.
Gains in crude oil cushioned the losses in the Lonnie. WTI soared more than 3% near one month high above $91. The move followed the announcement from OPEC+ members to cut production by 2 million barrels per day from November. A probable supply squeeze out of the step helped gain in global prices.
On a broader perspective, the Federal Reserve is expected to outpace the Bank of Canada (BoC) rate hike race. A major factor that could underpin the demand for risk-sensitive CAD.
USD/CAD set to extend gains above 1.3750
On the daily chart, the USD/CAD pair gained more than 150-pip and close above 1.3740. However, the price met the supply zone near 1.3750-1.3770. In today’s session, the spot retreated below 1.3720.
The formation of the Doji candlestick near the higher level indicates indecision among traders. A minor correction is expected toward the 0.23% Fibonacci retracement level at 1.3500.
The MACD oscillator holds in the overbought zone with a receding bearish momentum, supporting the initial bearish momentum.
A daily close above 1.3750 would continue with the gains. On moving higher, we could see 1.3800 as the first upside target. Further, we could see gains toward 1.4000 in the short term.
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