USD/CAD reclaims 1.2910 on diverging Employment data, oil tumbles below 109.00

• USD/CAD has climbed to 1.2913 in the early trade, oil trades lower.
• Weak Canadian labor data has brought a sell-off for the loonie.
• The US inflation is seen lower at 8.1% against the previous multi-decade high print of 8.1%.

The USD/CAD pair has reclaimed its previous week’s high at 1.2913 in the early trade on the strengthening US dollar index (DXY) and struggling oil prices.

The DXY is advancing higher to recapture the round level resistance of 104.00 as higher US Nonfarm Payrolls (NFP) and flat Unemployment Rate have signaled that the US labor market is rock solid in an inflationary environment. The US Bureau of Labor Statistics reported the monthly job additions at 428k, much higher than the estimates of 391k. While the Unemployment Rate remained constant at 3.6% in comparison with the previous figure but expectations were elevated to 3.6%. The US labor market is extremely tight and higher employment opportunities may push the wages for the employees.

Meanwhile, Canada’s Employment data remained vulnerable in April. The Canadian administration added 15.3k jobs, significantly lower than the estimates of 55k and the prior print of 72.5k. This has dented the demand for loonie and has underpinned the greenback. Apart from that, oil prices have tumbled below $109.00 as UK’s recession fears have renewed the demand concerns in the world’s fifth-largest economy.

This week, investors will keep an eye over the release of the US Consumer Price Index (CPI), which is due on Wednesday. The US inflation is seen at 8.1%, lower than the previous figure of 8.1%. This could lower the necessity of a jumbo rate hike by the Federal Reserve (Fed) in June.