USD/CAD inter-markets: Targets 1.3600 on better NFP

The USD/CAD pair is seen correcting lower during the European session, after having rallied to fresh 10-week highs at 1.3536 a day before. The latest leg down in the spot is partly driven by a rebound in oil prices from the lowest levels since the OPEC deal reached in mid-Dec.

Also, broad based US dollar weakness on back of profit-taking ahead of the critical US jobs data, collaborates to the downbeat tone seen in USD/CAD this Friday.

Over the past week, the major has rallied almost 200-pips, largely on the back of widening yield differentials between the 10-year treasury yields and its Canadian bond yields, as the probability of a March Fed rate hike rose to nearly 90%, as reflected by the CME Fed Watch Tool. Meanwhile, more-than 7% drop in oil prices this week amid record high US crude inventory levels fanned concerns over the effectiveness of the OPEC oil output cut deal.

Looking ahead, the spot eagerly await the US and Canadian employment numbers, with the US NFP data expected to emerge the main risk event for the prices today. Markets are expecting 200k job to have added in the US economy last month versus 227k booked last. A better NFP print will confirm a rate hike at the FOMC meeting due next week, and hence, will bolster the USD bids across the board.