USD/CAD bounces off daily low, defends 1.2700 mark ahead of US/Canadian jobs report

• USD/CAD attracted some dip-buying near the 1.2700 mark, though lacked any follow-through.
• Softer US bond yields kept the USD bulls on the defensive and capped the upside for the pair.
• The market focus will remain glued to the monthly jobs report from the US (NFP) and Canada.

The USD/CAD pair reversed an intraday dip and inched back closer to the daily high, around the 1.2720-25 region during the early part of the European session.

The pair managed to defend and attract some buying near the 1.2700 round-figure mark on Friday, though the attempted bounce lacked bullish conviction. Crude oil prices eased a bit from the highest level since mid-November, which undermined the commodity-linked loonie and acted as a tailwind for the USD/CAD pair.

On the other hand, a generally positive tone around the equity markets weighed on the safe-haven US dollar amid retreating US Treasury bond yields. This, in turn, failed to provide any meaningful impetus to the USD/CAD pair. Investors also seemed reluctant ahead of the monthly jobs data from the US and Canada.

The popularly known NFP report, due later during the early North American session, will be looked upon to reinforce the need for higher interest rates. It is worth recalling that the December FOMC meeting minutes that some policymakers want to tighten monetary policy faster to combat stubbornly high inflation.

The data, along with the US bond yields and the broader market risk sentiment, should influence the USD demand. Apart from this, traders will take cues from oil price dynamics to grab some short-term opportunities. Nevertheless, the USD/CAD pair seems poised to snap two successive weeks of the losing streak.

Technical levels to watch