- USD/CAD has slipped lower below daily trendline resistance.
- Markets in wait and see mode ahead of the key NFP report.
USD/CAD is currently trading at 1.2554 in consolidation ahead of the highly anticipated US Nonfarm Payrolls.
The greenback's direction is in limbo while markets remain split on its trajectory.
On the back foot even before Fed Chair Jerome Powell's comments last Friday at Jackson Hole, the Us dollar has lost almost 1.4%. But it is still up around 3% for the year.
The US dollar extended its recent decline as third-quarter Gross Domestic Product estimates were slashed and amid elevated risk sentiment.
Meanwhile, the start of the week's Canadian second-quarter GDP data came as a big negative surprise to economists.
However, the CAD has been supported in a relatively robust commodities complex this week owing to US dollar weakness.
For instance, US crude rallied again as the market grappled with the ongoing impact of Hurricane Ida on US crude production in the Gulf.
Nearly 94% of Gulf production remains shut and IHS Markit reported that most refineries that were hit by Ida escaped major damage but will not be fully back online for three weeks.
In other US data on Thursday, US Weekly Jobless Claims were a touch lower than expected.
Initial claims of 340k were close to expectations of 345k, while continuing claims fell to 2.748m (est. 2.808m).
Looking ahead to the data for today, analysts at Westpac expects a Nonfarm Payrolls gain of 850k for August (market median estimate is 725k), as strong demand for labour persists.
''The August ISM non-manufacturing index should show underlying demand remaining strong, despite services being at risk from delta (market f/c: 61.8),'' the analysts also said.
DXY and USD/CAD technical analysis
The DXY index has dropped to critical support in 92.20 and a break there will be expected to see a downside continuation in USD/CAD:
