- USD/CAD attracts some buyers and grabs a 3-day defeat in a week of moroa.
- Bearish oil prices weaken runes in the middle of a trade repositioning and support the couple.
- Traders are currently looking forward to the details of employment from the US and Canada to get new impulses.
USD/CAD Recovers from Recent Lows, Gains Positive Momentum
The USD/CAD pair has recovered from the overnight decline near the 1.4240-1.4235 range, marking a one-and-a-half-week low, and has seen some positive momentum during the Asian trading session on Friday. This upward movement, the first in three days, has pushed the spot price back above the 1.4300 level.
Bearish Crude Oil Prices Support USD/CAD Upswing
The decline in crude oil prices, which negatively impacts the oil-sensitive Canadian Dollar (CAD), has provided a supportive backdrop for the USD/CAD pair. Additionally, this uptick can be attributed to traders adjusting their positions ahead of the crucial employment data releases from the US and Canada later in the day. However, any significant upward movement remains limited due to continued selling pressure on the US Dollar (USD).
US Dollar Weakness Amid Trade Policy Concerns
Lingering concerns about US President Donald Trump’s trade tariffs potentially slowing down US economic growth and prompting multiple interest rate cuts by the Federal Reserve have driven the USD to its lowest level since early November. Investors are also uncertain about Trump’s trade strategies, particularly following his reversal on tariffs imposed on Mexico and Canada earlier this week.
Temporary Relief from Trade Tensions
On Thursday, Trump announced a temporary exemption from the 25% tariffs for goods from Canada and Mexico that comply with the US–Mexico–Canada Agreement (USMCA) for the next month. This move has alleviated trade war fears and, combined with expectations that the Bank of Canada (BoC) will pause rate cuts at its upcoming meeting, may provide support to the CAD and limit further gains in the USD/CAD pair.
Key Data Releases in Focus
Market participants are likely to adopt a cautious stance ahead of the release of the US Nonfarm Payrolls (NFP) report, which is expected to play a crucial role in shaping the short-term direction of the USD. Similarly, the Canadian jobs report will also be closely monitored, as it could provide additional direction for the USD/CAD pair. Despite the recent recovery, the pair remains on track for weekly losses, and the broader market environment suggests caution for bullish traders.
