USD/CAD sees a downside below 1.3500 ahead of US/Canada employment data

• USD/CAD is eyeing more weakness below 1.3500 as the focus has shifted to employment data.
• The DXY may surrender the 110.00 cushion amid weaker US NFP projections.
• An upbeat consensus for Canada’s labor market data amid hawkish BOC will strengthen loonie.

The USD/CAD pair has turned sideways in early Asia after dropping to near the psychological cushion of 1.3500. The major is expected to surrender the 1.3500 cushion and will deliver more weakness ahead. On a broader note, the asset shifted into a negative trajectory after dropping below the crucial support of 1.3600.

The pair is displaying a vulnerable performance as the US dollar index (DXY) is going through a rough time ahead of the US employment data. Policy tightening measures by the Federal Reserve (Fed) have started displaying their consequences and the job creation process is a major victim now. Investors are dumping the DXY on lower consensus for the Nonfarm Payrolls (NFP) data. Weaker-than-expected US employment data will force the Fed to slow down the pace of hiking interest rates.

The US NFP is seen lower at 250k vs. the prior release of 315k. While the Unemployment Rate is seen stabilizing at 3.7%.

On the loonie front, investors are similarly looking for the Canadian employment data, which is due on Friday. Net Change in Employment is seen extremely higher at 20k vs. the prior release of -39.7k. While the jobless rate is seen steady at 5.4%. In times, when the Bank of Canada (BOC) is continuously escalating the interest rate, upbeat employment data will delight the central bank.

Meanwhile, oil prices have comfortably established above the $85.00 hurdle ahead of the OPEC+ meeting. Oil prices have remained in negative territory for the past few months, which will force the oil cartel to announce production cuts. The majority of the OPEC members have not been able to produce promised output. Therefore, the production cuts are not expected to be huge and a pullback in the black gold will conclude.