Loonie Holds Firm Ahead of Crucial Jobs Data
The Canadian dollar continues to hold its ground against the US dollar as the market awaits crucial jobs data from both countries. The USD/CAD pair has struggled to gain traction, consolidating below the 1.3800 mark and remaining near a two-week low. Higher oil prices and the Bank of Canada's hawkish message are underpinning the Canadian currency.
The recent surge in crude oil prices is due to ongoing geopolitical tensions in the Middle East, specifically the US-Iran clashes over the Strait of Hormuz. This has added to the commodity-linked Loonie's strength and contributed to the negative outlook for the USD/CAD pair.
Meanwhile, the US dollar remains depressed due to receding Federal Reserve rate hike bets and soft US bond yields. The focus is now on the upcoming US Nonfarm Payrolls report, which will be accompanied by Canada's monthly employment details. This crucial data, along with further developments in the Middle East crisis, is expected to provide some impetus to the USD/CAD pair.
According to TD Securities, even a robust labor market print may not be sufficient for the Fed to hike interest rates in September. The bank notes that inflation data will be more decisive for the policy outlook and dollar direction.