USD/CAD pares heavy intraday losses, back above 1.3000 post-dismal Canadian jobs data

• USD/CAD recovers around 50 pips from over a one-week low touched earlier this Friday.
• Aggressive Fed rate hike bets assist the USD to trim a part of its heavy intraday losses.
• Disappointing Canadian jobs data weighs on the domestic currency and offers support.
• Rallying crude oil prices continue to underpin the loonie and cap the attempted bounce.

The USD/CAD pair stages a goodish rebound from the 1.2980 region, or over a one-week low touched this Friday, though remains in the negative territory for the third successive day. The pair is seen trading near the 1.3025 region during the early North American session, still down nearly 0.50% for the day.

Expectations that the Federal Reserve will tighten its monetary policy at a faster pace assist the US dollar to trim a part of its heavy intraday losses to a fresh monthly low. The Canadian dollar, on the other hand, is undermined by disappointing domestic employment data. This, in turn, offers some support to the USD/CAD pair and contributes to the intraday recovery of over 50 pips.

Statistics Canada reported this Friday that the number of employed people declined by 39.7K in August against expectations for an addition of 15K. Further details of the publication revealed that full-time employment declined by 77.2K and the Unemployment Rate rose from 4.9% in July to 5.4% during the reported month. This, however, was offset by a strong rally in crude oil prices.

Against the backdrop of a symbolic output cut by OPEC+, Russia's threat to cut oil flows to any country that backs a price cap on its crude raises concerns about tight global supply. Rising oil prices offer support to the black liquid, which is underpinning the commodity-linked loonie amid a more hawkish Bank of Canada. This, in turn, keeps a lid on any further recovery for the USD/CAD pair.

Furthermore, the markets already seem to have fully priced in a supersized 75 bps rate hike at the next FOMC meeting on September 20-21. This, along with subdued action around the US bond yields, might hold back the USD bulls from placing aggressive bets. Hence, it will be prudent to wait for strong follow-through buying before positioning for any further appreciating move for the USD/CAD pair.

In the absence of any relevant economic releases from the US, scheduled speeches by Fed officials will play a key role in influencing the USD demand. Apart from this, oil price dynamics will be looked upon to grab short-term trading opportunities. Nevertheless, the USD/CAD pair remains on track to register heavy weekly losses and snap a four-week winning streak to the 1.3200-1.3210 strong barrier.

Technical levels to watch