- USD/CAD gained strong positive traction on Friday and was supported by a blowout USD rally.
- The worsening situation in Ukraine benefitted the safe-haven USD and remained supportive.
- An uptick in crude oil prices did little to underpin the loonie or hinder the intraday move up.
- Traders eye US NFP report for some impetus, though the focus remains on the Ukraine crisis.
The USD/CAD pair scaled higher through the mid-European session and climbed to a multi-day high, around mid-1.2700s in the last hour.
The pair built on the overnight solid bounce from the lowest level since January 26, around the 1.2585 region and gained strong follow-through traction for the second successive day on Friday. The momentum was exclusively sponsored by a blowout US dollar rally and seemed rather unaffected by an uptick in crude oil prices, which tend to underpin the commodity-linked loonie.
The Russian attack on Ukraine's Zaporizhzhia nuclear power plant - the largest of its kind in Europe - unnerved investors and triggered a fresh wave of the global risk-aversion trade. The bombardment raised fears of an environmental catastrophe and boosted demand for traditional safe-haven assets, which, in turn, pushed the greenback to the highest level since June 2020.
The worsening situation in Ukraine further fueled concerns about disruption to Russian crude exports and acted as a tailwind for oil prices. That said, prospects for more Iranian supplies in the event of a nuclear deal acted as a headwind for the black gold. This, however, failed to lend support to the Canadian dollar or hinder the USD/CAD pair's strong intraday move up.
Market participants now look forward to the US monthly jobs report, popularly known as NFP, due for release during the early North American session. A significant divergence from the expected readings might provide some impetus to the USD/CAD pair. The reaction, however, is likely to remain limited as the focus remains glued to developments surrounding the Russia-Ukraine saga.
Technical levels to watch