Canadian Dollar Boosted by Crude Oil Rally

USD/CAD is hovering near 3 month lows in early trading on Monday amid surging oil prices and narrower spreads between U.S. and Canadian bond yields.

Crude oil prices have been boosted by OPEC-led supply cuts and U.S. sanctions against Venezuela. NYMEX crude oil futures rallied to their highest level since late November in early Monday trading.

The U.S. Labor Department reported on Friday that┬ánonfarm payrolls rose by a whopping 304,000. Analysts had forecast a rise of only 170,000. However, December’s gain of 312,000 was revised substantially lower to 222,000. Meanwhile, the U.S. unemployment rate ticked higher to 4 percent.

The U.S. dollar index is trading modestly higher on the back of the broadly positive employment report, despite USD/CAD slipping lower.

Looking at the USD/CAD daily chart above we can see that price closed below the 200 period simple moving average on Friday for the first time since October 2018 . If price can break below Friday’s low of 1.3071, the key psychological level of 1.30 will come into view, representing a downside target for the bears.