USD/CAD eases back after squeezing out fresh multi-month highs near 1.2840, bull trend remains intact

• USD/CAD squeezed out a fresh two-and-a-half month high on Thursday but is now flat just above 1.2800.
• The pair continues to ebb higher within the confines of a bullish trend channel.

It’s been a largely subdued day for USD/CAD, with the pair for the most part following the path of least resistance and gradually ebbing higher. USD/CAD has been moving higher in recent weeks within a bullish trend channel. The pair at one point managed to squeeze out a fresh another two-and-a-half month high at 1.28376 (less than one pip above Tuesday’s high at 1.28369). The pair has since dropped back to trade around 1.2810, where it is flat on the session.

Strong US data

Amid a lack of any fresh Canadian fundamental newsflow on the day, USD/CAD traders were mainly focused on US dollar and crude oil market flows. Beginning with the former; the US dollar was broadly neutral against its G10 peers on Thursday, despite further strong US macro data. Initial weekly jobless claims and November challenger layoffs on Thursday were both better than expected after Wednesday’s strong November ISM Manufacturing PMI survey and ADP employment change estimate.

One reason why the dollar may have ignored the strong data is because it broadly fits with the narrative of US economic/labour market strength being painted by the Fed. For another, it's official US jobs report day on Friday (the November report), so it's perhaps not surprising to see FX markets enter wait-and-see mode. A few Fed members spoke, though none added anything beyond Powell’s hawkish message from earlier in the week.

Choppy oil

Moving on to oil markets; conditions were choppy with WTI now broadly flat on the day after OPEC+ announced its decision to press ahead with a 400K barrel per day output hike in January. The surprise decision (analysts had expected a halt amid Omicron-related uncertainty) initially triggered downside, but oil prices swiftly recovered. Omicron and oil flows will remain a key driver on Friday, but maybe overshadowed somewhat by the dual release of both US and Canadian November jobs data at 1330GMT.