USD/CAD steadies around 1.2560 as DXY bided mildly, oil rebounds

• USD/CAD is oscillating around 1.2560 as investors await US NFP.
• Lower ADP Employment Change numbers have raised the odds of lower NFP release.
• Oil prices are expected to move higher on the demand recovery in China and renewed supply concerns.

The USD/CAD pair is displaying back and forth moves in a 1.2557-1.2578 in the Asian session. A dead cat bounce has brought some bids in the asset, however, the lackluster performance will remain intact as investors are awaiting the US Nonfarm Payrolls (NFP).

Investors should brace for a compelling slippage in the payrolls as the US economy is maintaining the full employment levels from the last six months. Therefore, the employment generation is expected to elevate but at a diminishing rate. Also, the US Automatic Data Processing (ADP) Employment Change landed at 128k, principally lower than the estimates of 300k. Lower ADP Employment Change is also advocating a slippage in the appointment figures.

Loonie bulls have dominated the greenback the whole week as the Bank of Canada (BOC) elevated its interest rates by 50 basis points (bps). The BOC announced a jumbo rate hike considering the ramping-up inflation in the loonie region. Mounting inflationary pressures are eating the wallets of the households and an aggressive stance on rates was highly required.

On the oil front, oil prices are witnessing a correction after a sheep upside move. Going forward, the black gold is expected to remain in the grip of bulls amid renewed supply concerns on lost export of oil from Russia and recovery of demand in China post the withdrawal of restrictions. The reopening of Shanghai is expected to spurt the oil demand. The deadly duo of tight supply and demand recovery will keep the oil bulls underpinned.