USD/CAD consolidate recent gains above 1.2500, Canadian jobs report eyed

• USD/CAD pares the heaviest weekly gains in three, snaps four-day uptrend.
• WTI strength battles US dollar pullback amid downbeat market sentiment.
• Canadian employment figures suggest strong recovery in June.

USD/CAD eases from 11-week top to 1.2530, down 0.05% intraday, during Friday’s Asian session. The loonie pair refreshed multi-day high the previous day as the coronavirus (COVID-19) concerns weighed on the commodity-linked currencies. However, the cautious sentiment ahead of the key Canadian data triggered the quote’s pullback of late.

Although the covid headlines from Canada haven’t been so grim in recent days, fears of Delta variant are all-pervasive and probe the economic recovery hopes. The US witnessed that over 50% of virus cases from the latest two weeks are of strains while the same concerns do test the UK’s unlock plans. Further, Australia, Thailand and Indonesia are some additional names that recently struggle with the virus variant.

Given the economic fears weigh on the commodities, the Antipodeans like AUD, NZD and CAD also drown, fueling the USD/CAD prices. In doing so, the pair buyers ignored the sustained strength of Canada’s main export item, crude oil.

That said, WTI oil prices bounced off a three-week low the previous day amid broad US dollar pullback and weaker-than-expected official inventory levels published by the US Energy Information Administration (EIA).

It’s worth noting that the equities and Treasury yields also portrayed risk-off mood the previous day while S&P 500 Futures pause downside by the press time.

Looking forward, the covid headlines will be the key to follow while the Canadian jobs report for June will also be crucial on the data front. Forecasts suggest the headline Net Employment Change to reverse the previous contraction of 68K with +195K figures whereas the Unemployment Rate is likely recovering from 8.2% prior reading to 7.7%.

Read: Canadian Jobs Preview: USD/CAD set to fall amid summer hiring boom?

Technical analysis

Unless crossing a two-month-old resistance line, around 1.2545, on a daily closing basis, USD/CAD bulls may remain cautious. However, bears may refrain from taking risks of entries until the quote stays beyond the previous resistance line from late January, near 1.2430.