USD/CAD drops below 1.35 as oil recovers
Although the USD/CAD's reaction to the dismal nonfarm payrolls report was limited initially, the pair ran through some fresh in the NA session and eased below the 1.35 handle on recovering crude oil prices. As of writing, the pair was trading at 1.3487, losing 0.22% on the day.
Earlier in the session, the US Dollar Index refreshed its lowest level since early November after today's data showed that the nonfarm payroll growth in the U.S. came in at 138,000, missing the market consensus of 185,000. Additionally, April's reading was revised down to 174,000 from 211,000. However, despite that disappointing reading, the probability of a June rate hike eased just a little. Nevertheless, the DXY is marching towards a weekly close below 97 and is now at 96.72, losing 0.45% on the day.
- US: Total nonfarm payroll employment increased by 138,000 in May
- Soft US jobs report not enough to stop a June Fed hike - ING
- Goldman Sachs: 90% chance U.S. Fed raising interest rates at June 13-14 policy meeting
On the other hand, after slipping to its lowest level since May 10 at $46.74, the barrel of West Texas Intermediate staged a moderate rebound, increasing the demand for the commodity-linked loonie and putting more pressure on the pair. At the moment, the barrel of WTI is trading at $47.85, still losing 1% on the day.
- WTI bounces off 3-week lows, recovers to $47.50 level
Technical outlook
Despite today's fall, the pair is on its way to a positive weekly close following two straight weeks of losses. The RSI on the daily graph is headed south towards the 30 handle but the pair could struggle to extend its momentum as the trading volume is likely to thin out in the last few trading hours of the week. Above the 1.35 psychological level, 1.3525/30 (50-DMA/Fibo 50% retracement of April-May rise) remains as a tough resistance to break ahead of 1.3600 (psychological level) and 1.3720 (May 14 high). On the downside, supports align at 1.3435 (May 31 low), 1.3355 (200-DMA) and 1.3300 (psychological level).