Forex - USD/CAD trims gains as oil prices rebound
The U.S. dollar trimmed gains against its Canadian counterpart on Thursday, as investors turned their attention to Friday’s highly-anticipated U.S. employment data and as a rebound in oil prices lent support to the commodity-related Canadian currency.
USD/CAD pulled back from 1.2618, the highest since July 20, to hit 1.2597 during early U.S. trade, still up 0.21%.
The pair was likely to find support at 1.2530, Wednesday’s low and resistance at 1.2641, the high of July 20.
The U.S. Department of Labor said initial jobless claims decreased by 5,000 to 240,000 in the week ending July 29 from the previous week’s revised total of 245,000. Analysts expected jobless claims to fall by 3,000 to 242,000 last week.
Investors were now looking ahead to Friday’s nonfarm payrolls report for July to gauge whether the U.S. economy is strong enough for the Fed to stick to its planned tightening path.
The greenback has been under pressure recently amid worries over political turmoil in Washington and recent lackluster economic reports, which have raised doubts over whether the Federal Reserve will raise rates again this year.
The dollar had been supported by the Fed's gradual policy tightening since late 2015 but the prospect that other major central banks may join it in tightening monetary policy has also weighed on the U.S. dollar.
Meanwhile, the Canadian dollar was mildly supported by a rise in oil prices on Thursday, after weekly U.S. supply data painted an upbeat picture on domestic demand for crude and refined products.
The loonie was lower against the euro, with EUR/CAD adding 0.18% to 1.4927.