USD/CAD climbs above 1.2700 as USD continues to gather strength ahead of NFP

The USD/CAD pair dropped below 1.2600 on Thursday but staged a sharp recovery to close the day in the positive territory. With the greenback preservin  |  05/03/2021 11:17
  • USD/CAD started to push higher during the European trading hours.
  • US Dollar Index advances to fresh multi-month highs near 92.00.
  • Investors await February Nonfarm Payrolls report from the US.

The USD/CAD pair dropped below 1.2600 on Thursday but staged a sharp recovery to close the day in the positive territory. With the greenback preserving its strength on Friday, the pair continues to push higher and was last seen trading at 1.2715, gaining 0.4% on a daily basis. 

Surging crude oil prices on Thursday provided a boost to the commodity-sensitive CAD and weighed on USD/CAD. After the OPEC+ agreed to keep the oil output unchanged, the barrel of West Texas Intermediate gained nearly 5%. Although the WTI is up more than 1% and trading at its highest level in more than a year near $65, USD/CAD preserves its bullish momentum on the back of broad USD strength.

Focus shifts to US NFP report

FOMC Chairman Jerome Powell downplayed the US bond market turmoil and the 10-year US Treasury bond yield rose more than 5%. Consequently, the US Dollar Index (DXY) jumped to a fresh multi-month high and extended its rally on Friday. At the moment, the DXY is up 0.4% near 92.00.

Later in the session, the US Bureau of Labor Statistics will publish the February Nonfarm Payrolls (NFP) report. 

Previewing the NFP report, "the dollar has room to rise in case of a figure that only meets estimates with 182,000," said FXStreet analyst Yohay Elam. "A surge of over 250,000 would already serve as a bigger booster. Markets would assume that quick hiring even before the reopening means a rapid return to normality."

Nonfarm Payrolls Preview: Dollar booster? Three expectation downers pave way for upside surprise.

Technical levels to watch for

 

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