On Friday, the USD/CAD pushed higher, building on an overnight rise above the 100-day SMA.
The USD was supported by hawkish Fed predictions, which continued to sustain the currency.
The increase appears to be modest in light of rising oil costs and ahead of the US monthly jobs report.
During the early European session, the USD/CAD pair had a moderate positive bias and was last seen lingering near two-week highs, just below the mid-1.2400s.
The US dollar rose to three-month highs on speculation that the Federal Reserve may tighten monetary policy sooner rather than later if price pressures continue to worsen. The market’s hopes were boosted even more by the US ISM Manufacturing report on Wednesday, which revealed that the prices paid sub-component surged to a new high of 92.1. As a result, the USD/CAD pair was considered as a significant element that provided some support.
Meanwhile, a lack of movement in crude oil prices had no impact on the commodity-linked loonie or the USD/CAD pair. In reality, WTI consolidated just below the highest level seen since October 2018, which was reached on Thursday after an OPEC+ disagreement postponed a decision on supply levels. Investors now believe that the OPEC+ will not increase output at all, bringing the impasse to an end.
However, a new move down in US Treasury bond yields has deterred USD bulls from making aggressive bets, thus limiting any further advances for the USD/CAD pair. Investors were similarly hesitant, preferring to sit on the sidelines ahead of the release of the US monthly jobs report on Friday. The NFP report, which is keenly monitored, might have an impact on the Fed’s policy outlook and push the USD in the short term.
Aside from that, the reports from the OPEC+ meeting may inject some volatility into the oil market. This, in turn, may contribute to the creation of some interesting trading chances. Meanwhile, the USD/CAD pair is more likely to continue its sideways consolidative price movement above the crucial 100-day SMA./n
