The USD/CAD currency pair has encountered significant obstacles near the key resistance level of 1.3300 during the early London trading session. Investors are closely monitoring the release of employment data from the United States and Canada, keeping the Canadian dollar on edge.
Early European trading has seen selling pressure on S&P500 futures, indicating bearish market sentiment ahead of corporate earnings reports. Despite expectations of an interest rate hike by the Federal Reserve (Fed) in its upcoming July monetary policy meeting, the US Dollar Index (DXY) has experienced a sharp drop, nearing 103.17.
In contrast to the decline in the USD Index, 10-year US Treasury yields have surged to approximately 3.96%. According to the CME Fedwatch tool, there is an 88% likelihood of a 25 basis point (bp) interest rate hike, bringing it to a range of 5.25-5.50%.
Looking ahead, investors will closely watch the release of employment data from the United States. The US Automatic Data Processing (ADP) Employment Change report is expected to indicate the addition of 228,000 jobs in June, compared to the previous addition of 278,000.
On the Canadian Dollar front, investors will also await the release of labor market data scheduled for Friday at 12:30 GMT. Estimates suggest that the labor market added approximately 20,000 employees in June, following a decrease of 17,300 payrolls. The Unemployment Rate is anticipated to rise to 5.3% from the previous month’s rate of 5.2%. In addition to payroll figures, investors will pay close attention to the Average Hourly Earnings data.
Meanwhile, oil prices are experiencing slight downward pressure around $72.00, but further upside movement is still expected due to the lingering effects of Saudi Arabia’s production cuts announcement.
It is important to note that Canada is the primary exporter of oil to the United States, and higher oil prices would provide support for the Canadian Dollar.
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