• Canadian Dollar claws back losses suffered overnight after strong US labor data support the Greenback.  

• CAD finds a friend in rising Crude Oil prices after inventory data shows another week of declines. 

• USD/CAD trend is now bullish both on shorter and longer time frames after decisive breach of key 1.3270 lower highs.  

Canadian Dollar (CAD) recoups overnight losses against the US Dollar (USD), ahead of key employment data on Thursday, on the back of the continued rally in its primary export Oil, which itself sees gains on falling US stockpiles. 

USD/CAD is trading in the upper 1.33s on Thursday as the US session gets underway.  

Canadian Dollar news and market movers 

• The Canadian Dollar trades roughly flat versus the US Dollar on the back of higher Oil prices, Canada’s chief export. 

• Oil is rising on the back of data which shows increased demand from summer vacation-driving in the US, according to data from the Energy Information Administration, released Thursday.

• The EIA figures show Crude stockpiles falling by 1.508 million barrels continuing the trend of last week’s 9.603M decline. 

• The USD/CAD pair has been helped by a strong rally in the US Dollar on Thursday after US labor market data beat expectations. 

• Should the data be followed by a higher-than-expected result for Nonfarm Payrolls in June, out on Friday at 12:30 GMT, the USD could rally further, pushing the pair even higher. 

• Canadian employment data, released at the same time, will also impact USD/CAD. 

• Economists estimate Net Change in Employment for June to come out at 20K, from -17K in May. 

• The Unemployment Rate is forecast to rise to 5.3% from 5.2% previously. 

• CAD came under further pressure on Thursday after data showed the Canadian International Merchandise Trade fell to -3.4B vs. 1.5B expected in May, and Imports outweighed Exports when they had been forecast to come out almost equal. 

Canadian Dollar Technical Analysis: Short-term trend turns bullish

USD/CAD is in a long-term uptrend on the weekly chart, which began after price rose following the 2021 lows. Since October 2022, the exchange rate has been in a sideways consolidation within the uptrend. Given the old saying that ‘the trend is your friend’, however, the probabilities overall an eventual continuation higher, favoring longs over shorts.

USD/CAD appears to have completed a large measured move price pattern that began forming at the March 2023 highs. This pattern resembles a 3-wave zig-zag, much like an ABC correction in which the first and third waves are of a similar length (labeled waves A and C on the chart below). 

The pair’s measured move looks like it has completed given waves A and C are of a similar length. This suggests price probably bottomed at the June 27 lows and is now at the start of a new cycle higher