USD/CAD extends recovery in tandem with DXY

• DXY hits fresh 5-day tops.
• WTI turns lower in Europe.
• Eyes on BOC Business outlook survey and Fedspeak.

The USD/CAD pair keeps its recovery mode intact well above the 1.24 handle, as weaker oil prices combined with broad-based US dollar rebound continue to remain supportive.

USD/CAD headed to 1.2450

Amid unabated US dollar demand across the board, the USD/CAD pair remains buoyed and looks to extend the recovery towards the 1.2450 barrier. The USD index jumps +0.25% to flirt with five-day tops of 92.03, as markets believe that last month’s selling in the greenback may be overdone.

 Meanwhile, fresh selling seen around the US oil, WTI, weighs negatively on the resource-linked Loonie turned negative, which further collaborates to the upside in the spot. WTI trades subdued near $ 61.50, although the losses appear capped amid lower US rigs count numbers.

The pair slumped to the lowest levels since Sept 2017 after the CAD was boosted on the Canadian jobs report, which came in strongly for the second month in a row, far exceeding expectations. “Canadian Unemployment Rate (Dec) was 5.7% vs an expected 6.0%, from a prior of 5.9%. Net Change in Employment (Dec) was 78.6K vs an expected 1.0K, with a previous read of 79.5K,” The FxPro Analyst Team noted.

Markets now look forward to the sentiment on the Wall Street and BOC Business outlook survey for fresh trading impetus while the FOMC member Bostic’s speech will also hog the limelight amid a data-quiet NA session ahead.

USD/CAD Technical View

The immediate support for the pair aligns at 1.2378 (daily low) ahead of 1.2353 (4-month low) and 1.2300 (natural support). On the upside, resistances could be seen at 1.2448/50 (5-DMA/ psychological levels), 1.2510 (10-DMA) and 1.2556 (intermittent tops).