USD/CAD weakens back below mid-1.2900s as oil recovers

The USD/CAD pair came under some renewed selling pressure during early European session and retreated over 40-pips from session tops near 1.2985 region.

With investors looking past Wednesday's FOMC meeting minutes, a sharp recovery in crude oil prices benefitted the commodity-linked currency - Loonie and was seen weighing on the major. Meanwhile, lack of any follow through US Dollar buying interest did little to stall the pair's retracement to session lows near 1.2940 region.

However, a modest pick-up in the US Treasury bond yields was seen lending some support and might contribute towards limiting further downside, at least for the time being.

It, however, remains to be seen if the pair is able to hold recent daily closing lows support near 1.2935-30 region or continues with its recent sharp depreciating move led by hawkish BoC rhetoric as investors prepare for today's important macro releases. 

Today's release of ADP report on the US private sector employment would influence market expectations from Friday's official jobs data (NFP) and hence, would be the highlight from today's economic docket. Meanwhile, the release of US ISM non-manufacturing PMI along with trade balance data from the US and Canada would also be looked upon for some short-term trading impetus.

Technical levels to watch

On a sustained weakness below 1.2935-30 region, the pair is likely to accelerate the slide towards the 1.2900 handle before eventually dropping to test its next major support near mid-1.2800s. On the flip side, any recovery attempts beyond 1.2970-75 region might continue to confront some fresh supply near the key 1.30 psychological mark, above which a bout of short-covering could lift the pair towards 1.3060-65 horizontal resistance.