On Monday, the USD/CAD caught some new offers and recouped some of its post-NFP losses.
The loonie was weakened by a milder tone surrounding crude oil prices, which gave it a small boost.
Bulls were unable to place aggressive wagers due to the restrained USD price action, which restricted the upside.
Through the first half of the European day, the USD/CAD pair maintained its modest intraday gains, but lacked any follow-through and remained below the mid-1.2300s.
On the first day of a new trading week, the pair managed to regain some positive momentum and recoup some of Friday’s losses, which were fueled by a mixed US monthly jobs data. The commodity-linked loonie was weakened by a milder tone surrounding crude oil prices, which provided some support to the USD/CAD pair. Bulls were held back from putting aggressive wagers by a muted US dollar price action, which restricted the gains, at least for now.
The UAE continues to oppose an OPEC+ agreement to increase production by around 2 million barrels per day from August to December 2021 and to extend the remaining output cuts until the end of 2022. The news functioned as a headwind for the black gold ahead of the next OPEC+ meeting, which is set to take place on Monday. This was viewed as one of the primary factors that helped the USD/CAD pair gain some ground.
Meanwhile, an unexpected increase in the US unemployment rate to 5.9% overshadowed a stronger-than-expected headline NFP print in June, which showed the US economy added 850K jobs. This alleviated market concerns about an earlier Fed rate hike, keeping USD bulls on the defensive and limiting USD/CAD gains. Investors also appeared hesitant to make aggressive bets due to the lack of liquidity.
As a result, before positioning for any additional appreciating rise, it would be advisable to wait for some follow-through buying. The attention of the market now switches to the release of the FOMC meeting minutes, which is scheduled for Wednesday. Investors will be looking for hints regarding the Fed’s policy outlook, which will have a short-term impact on the USD. This, combined with oil price dynamics, should aid in determining the next leg of the USD/CAD pair’s directional move./n
