The U.S. dollar rose to three-week highs against its Canadian counterpart on Monday, as Friday’s upbeat U.S. employment data continued to support demand for the greenback, while a pullback in oil prices weighed on the commodity-related Canadian currency.
USDCAD hit 1.2714 during early U.S. trade, the pair’s highest since July 14; the pair subsequently consolidated at 1.26951, up 0.37%.
The pair was likely to find support at 1.2553, Friday’s low and resistance at 1.2750, the high of July 14.
The dollar strengthened broadly after the U.S. Labor Department on Friday said the economy added 209,000 jobs last month, blowing past expectations for an increase of 183,000.
The unemployment rate ticked down to 4.3% in July from 4.4% the previous month, in line with expectations.
The report also showed that average hourly earnings increased by 0.3% last month, in line with forecasts and after a 0.2% gain in June.
The strong data fuelled expectations the Federal Reserve will stick to its plans for a third interest rate hike this year.
The greenback had been pressured lower by a combination of worries over political turmoil in Washington and recent lackluster economic reports, which raised doubts over whether the Fed would be able to stick to its planned tightening path.
Investors were now looking ahead to U.S. inflation reports later in the week for indications of whether the recovery in the dollar is sustainable in the longer term.
Meanwhile, the Canadian dollar was affected by a decline in oil prices on Monday, amid overall caution as officials from OPEC member and non-member nations kicked off a two-day meeting in Abu Dhabi.
The loonie was also lower against the euro, with EURCAD advancing 0.48% to 1.4965.