USD/CAD sellers attack 1.2800 as oil rises, US/Canada employment data eyed

• USD/CAD retreats after poking 10-week top, grinds higher of late.
• Oil prices cheer softer yields, doubts over OPEC+ verdict.
• Risk appetite sours but yields fail to improve ahead of US NFP.
• ISM Services PMI, Canada jobs report for November are important too.

USD/CAD pares intraday gains with the latest declines to 1.2810 during early Friday morning in Asia. The Loonie pair’s weakness could be linked to the run-up in the prices of Canada’s main export item WTI crude oil. However, cautious mood ahead of important data probes the traders of late.

WTI crude oil prices rise 1.2%, around $67.55 by the press time, as oil traders seem to be of double minds after the global oil producers announced output hike following the previous plans. However, the OPEC+ verdict to consider production adjustments in January might have helped the black gold buyers.

Adding strength to the commodity prices is the recent pullback in the US Dollar Index (DXY) and Treasury yields amid risk-off mood in the markets, coupled with indecision over the Fed’s next move.

Also confusing USD/CAD traders are the mixed updates over the South African variant of the coronavirus, dubbed as Omicron. While the covid variant cases are on the spike in the West and China, adding more countries recently, expectations that the UK is near to finding a cure keep the market players hopeful.

Elsewhere, US policymakers’ ability to avoid a government shutdown and the Sino-American jitters battle the hawkish Fedspeak and firmer US data.

Against this backdrop, US 10-year Treasury yields reverse the previous day’s bounce off a 10-week low while stock futures improve after marking losses in early Asia.

Looking forward, Canada’s Change In Employment and Unemployment Rate, expected 35K and 6.6% versus 31.2K and 6.7% previous readouts in that order, will join the US jobs report to entertain the USD/CAD traders. Among the US employment data, Nonfarm Payrolls, likely to rise from 531K prior to 550K, will be crucial to watch. Additionally, US ISM Services PMI for November, expected 65 against 66.7 prior, will also be important and so does oil price moves.

Read: US Nonfarm Payrolls November Preview: Can we agree the labor market is healing?

Technical analysis

Although the 1.2840-50 area comprising multiple hurdles marked during last three-months challenge USD/CAD buyers, sustained break of previous resistance line from August, around 1.2770, precedes a three-week-long rising trend line near 1.2750 to challenge pair’s downside.