USD/CAD refreshes two-week lows on upbeat Canadian jobs data, lacks follow-through
- USD/CAD dropped to two-week lows following the release of a strong Canadian jobs report.
- Softer crude oil prices undermined the loonie and helped limit deeper losses for the major.
- Rallying US bond yields continued benefitting the USD and further extended some support.
The USD/CAD pair witnessed some selling during the early North American session and refreshed two-week lows, around the 1.2500 mark in reaction to stellar Canadian employment details.
Statistics Canada reported that the Canadian economy added 259.2K jobs in February, surpassing market expectations by a big margin. This marked the first month of gains in the previous three and was accompanied by a slump in the unemployment rate, which fell to 8.2% from 9.4% previous.
The data added to speculations that the Bank of Canadia could start pulling back on stimulus as soon as next month and provided a modest lift to the Canadian dollar. However, a combination of factors helped limit any deeper losses for the USD/CAD pair, at least for the time being.
A softer tone around crude oil prices kept a lid on any strong gains for the commodity-linked loonie. Apart from this, a strong pickup in the US Treasury bond yields continued underpinning the US dollar and was also seen as another factor that extended some support to the USD/CAD pair.
From the US, the Producer Price Index fell short of expectations and came in to show a rise of 0.2% in February. The yearly rate jumped to 2.5% from 2% previous, though missed expectations for a reading of 2.6% and further eased worries about rising inflation, though did little to influence.
Meanwhile, the muted market reaction to upbeat data could be seen as a sign of bearish exhaustion and warrants some caution before positioning for any further depreciating move. That said, a sustained break below the key 1.2500 psychological mark would set the stage for further weakness.
Technical levels to watch