- USD/CAD edges lower on Thursday and snaps a three-day winning streak amid a softer USD.
- Rebounding US bond yields lend support to the USD and the pair ahead of the OPEC+ meeting.
- Traders look to US Jobless Claims, though the focus remains on monthly jobs data on Friday.
The USD/CAD pair struggles to capitalize on its weekly gains registered over the past three days and attracts some sellers during the first half of the European session on Thursday. Spot prices slide closer to mid-1.4000s in the last hour, though any meaningful downfall still seems elusive ahead of the crucial monthly employment details from the US and Canada on Friday.
Heading into the key data risk, a modest US Dollar (USD) downtick is seen as a key factor exerting some downward pressure on the USD/CAD pair. That said, rebounding US Treasury bond yields, bolstered by expectations for a less dovish Federal Reserve (Fed), acts as a tailwind for the Greenback. Apart from this, subdued Crude Oil prices ahead of the OPEC+ meeting could undermine the commodity-linked Loonie and contribute to limiting losses for the USD/CAD pair.
Meanwhile, hawkish remarks from several FOMC members, including Fed Chair Jerome Powell, suggested that the US central bank will adopt a cautious stance on cutting rates. Adding to this, speculations that US President-elect Donald Trump’s policies will reignite inflation might force the Fed to stop cutting rates or possibly raise them again. This assists the US Treasury bond yields to stage a modest bounce after their lowest closing levels in more than a month on Wednesday.
Crude Oil prices, on the other hand, struggle to gain any meaningful traction on the back of concerns over slowing oil demand, especially China – the world’s top importer. That said, the worsening Russia-Ukraine conflict and increasing tensions in the Middle East, along with expectations that the OPEC+ will further delay plans to increase production until at least the second quarter of 2025, act as a tailwind for the commodity, though fail to influence the Canadian Dollar (CAD).
Traders now look to the release of the US Weekly Initial Jobless Claims data, which, along with the US bond yields, will drive the USD demand and provide some impetus to the USD/CAD pair later during the North American session. Apart from this, Oil price dynamics should contribute to producing short-term opportunities. The mixed fundamental backdrop, meanwhile, warrants some caution for aggressive traders and before positioning for any firm near-term direction.
