Earlier, the U.S. dollar experienced weakness but the scenarios reversed as the market mood was positive following the release of better-than-expected U.S. Initial Jobless Claims. The Initial Jobless Claims report showed that 1.31 million Americans filed for unemployment benefits in a week. Meanwhile, Continuing Jobless Claims dropped to 18.1 million as some workers managed to find new jobs. Another support that escalates demand for the dollar might be the increasing fear of second wave of virus which can trigger to next lock-down making the investors to move to the safe haven asset. Moreover, the U.S. economy added 4.8 million jobs in June, exceeding expectations, and capturing a flurry of rehiring after states lifted stay-at-home orders.

On the other hand, the Canadian dollar found itself under pressure as WTI oil fell. There was no particular catalyst for this move, and it looks like a general virus worries put pressure on oil. Canadian oil benchmarks mostly travel in sync with the leading world benchmarks like Brent and WTI so the downside move of WTI oil is negative for the Canadian dollar.

News poll taken at the end of June found that only 30 percent of Canadians who either lost their job or were working reduced hours because of the pandemic were reemployed or working more. There is only a little change as compared to last week. The latest job posting data from Indeed Canada also reinforce the idea that new hiring stalled in the first week of July. It would be a worrying development that could suggest the disruptions in the job market from the COVID-19 lock-downs are more persistent than expected. Partial recovery of just 30 percent of the three million Canadians who had lost their job has put CAD under more pressure.

“Many of the personal services and accommodation services that have been hit really hard, there’s going to be some reopening effect but it’s going to be far from complete,” said an  Indeed economist Brendon Bernand.

USD/CAD 4 Hour Chart:

Support: 1.3518 (S1), 1.3453 (S2), 1.3415 (S3).

Resistance: 1.3621 (R1), 1.3659 (R2), 1.3725 (R3).

The prevailing market sentiment favors safe haven asset -USD and pressurizes Canadian dollar, we expect a bullish trend for USD/CAD.