USD/CAD hovers around 1.2830 as investors await US-Canada Employment data

• USD/CAD sees volatility contraction in the European session ahead of dual Employment data.
• The solid US labor market is strengthening the odds of a 75 bps rate hike by the Fed in June.
• Loonie sees improvement in its Unemployment Rate to 5.2%.

The USD/CAD pair is oscillating in a range of 1.2814-1.2866 as the market participants are eyeing the release of employment data from the US and Canada. The asset remained in positive territory on Thursday after the Fed-led rally in the risk-sensitive assets faded.

The greenback bulls are driving higher as higher seen US Nonfarm payrolls (NFP) have triggered the odds of a 75 basis point (bps) rate hike by the Federal Reserve (Fed) in June. A solid US labor market is compelling for higher wages, which in turn will energize the inflationary pressures and henceforth the aggressive hawkish tone from the Fed. The US NFP is seen at 391k against the prior print of 431k.

Meanwhile, the loonie bulls will also be driven by employment data on Friday. An improvement is seen in the Unemployment Rate as it is seen at 5.2% against the previous figure of 5.3%. While, Statistics Canada is likely to post the Net Change in Employment at 55k, lower than the past figure of 72.5k.

On the oil front, the oil prices are struggling to settle above $108.00 despite the tailwinds of renewed fears of supply concerns. Ongoing discussions over Europe’s embargo on Russian oil imports have raised questions over the alternative supplier of oil to the world’s largest trading bloc, the European Union (EU). Addressing the regular demand of 3.5 million barrels is not a cakewalk. It will require blood and sweat to shift the dependency on oil imports from Moscow. It is worth noting that Canada is the leading exporter of oil to the US and higher oil prices will result in a narrow fiscal deficit for loonie.