USD/CAD: Mildly offered below 1.3550 amid steady Oil price, focus on US, Canada employment data

• USD/CAD drops to the lowest levels in two weeks amid three-day downtrend.
• BoC’s Macklem appeared a bit more hawkish than Fed’s Powell and favored Loonie bulls.
• Oil price struggles to recover amid recession woes.
• Mixed US data escalates anxiety ahead of key US, Canada jobs report, NFP is the key.

USD/CAD renews a two-week low around 1.3520 as it cheers broad US Dollar weakness, as well as hawkish commentary from the Bank of Canada (BoC) Governor Tiff Macklem, to defend the latest bearish bias during a mid-Asian session on Friday.

That said, BoC’s Macklem said if they start to see signs that inflation is likely to get stuck materially above their 2% target, they are prepared to raise interest rates further.

On the contrary, Fed Chairman Jerome Powell appeared slightly cautious while suggesting that the current monetary policy is at sufficiently restrictive levels.

Elsewhere, WTI crude oil price remains steady near $68.60, fading the previous day’s bounce off the lowest levels since December 2021, as fears of recession and banking fallouts contrast with the softer US Dollar-led corrective bounce.

It should be noted that the mixed data also prod the USD/CAD traders from calling in fresh bids. That said, preliminary readings of Nonfarm Productivity and Unit Labor Cost for the first quarter (Q1) of 2023 came in mixed. That said, Nonfarm Productivity dropped to -2.7% in Q1 from 1.6% prior and -1.8% market forecasts whereas the Unit Labor Cost jumped to 6.3% versus 5.5% expected and 3.3% prior. Further, the US Goods and Services Trade Balance improved to $-64.2B from $-70.6B prior and $-63.3B market forecast. Further, Initial Jobless Claims edge higher to 242K for the week ended on April 28 versus 240K expected and 229K in previous readings.

Contrary to the US data, downbeat prints of Canada’s Ivey Purchasing Managers’ Index for April, and an improvement in Canadian International Merchandise Trade for March, seem to weigh on the Loonie pair.

Amid these plays, S&P 500 Futures print mild gains even if Wall Street benchmarks closed in the red. Further, the US Treasury bond yields ended Thursday’s North American session on the downside but an absence of Japanese traders limit bond market moves in Asia.

Moving ahead, USD/CAD may witness lackluster moves ahead of the key US and Canada employment data. However, the Loonie pair’s odds of rebound are high as forecasts suggest downbeat prints of the headline US Nonfarm Payrolls (NFP), expected 179K versus 236K prior.

Technical analysis

Even if the 100-DMA continues to challenge the USD/CAD pair sellers in the last two weeks, the impending bear cross on the MACD and steady RSI suggests a clear break of the 1.3525 DMA support this time. Alternatively, the Loonie pair’s surprise bounce can’t convince the bulls unless crossing a descending resistance line from March 10, near 1.3640 by the press time.