USD/CAD corrects to near 1.2960 ahead of critical employment data

• USD/CAD has displayed a gradual downside move after failing to cross the yearly high at 1.3083.
• The consensus for the employment data by the US and Canada is on the lower side.
• A meaningful recovery in the oil prices over the last two days has supported the loonie bulls.

The USD/CAD pair has witnessed a corrective phase to near the critical support of 1.2960. A corrective move in the asset is followed by greenback bulls’ failure to cross Wednesday’s high at 1.3083. The asset is hovering near the crucial support of 1.2960 and may likely remain vulnerable ahead of the employment data from the US and Canada.

Considering the estimates, the US economy has created 270k jobs in June, lower than the prior release of 390k. The jobless rate may remain stable at around 3.6%. What investors will focus on is the Average Hourly Earnings, as their lower recording against the soaring price pressures will trim the consumer confidence significantly and henceforth the demand for durable goods.

Meanwhile, the US dollar index (DXY) is displaying downside risks after testing the fresh 19-year high at 107.26. The DXY is displaying a subdued performance as lower US NFP won’t allow the Federal Reserve (Fed) to announce bumper rate hikes in a presumptuous manner.

On the loonie front, Statistics Canada is likely to report a Net Change in Employment at 22.5K, lower than the former release of 39.8k.  The Unemployment Rate is seen as stable at 5.1%. This will have a substantial impact on the loonie bulls.

The loonie bulls are also performing on recovery in the oil prices. At the press time, oil prices have corrected minutely below $100.00, however, the asset has recovered significantly from the low of $93.20 recorded on Wednesday.