Forexpros – The U.S. dollar erased gains against its Canadian counterpart in muted trade on Monday, after Friday’s surprisingly weak U.S. nonfarm payrolls report raised the prospect of more monetary easing from the Federal Reserve.
USD/CAD pulled back from 1.0445, the pair’s highest since November 28, to hit 1.0374 during early U.S. trade, shedding 0.34%.
The pair was likely to find support at 1.0314, Friday’s low and resistance at 1.0445, the session high.
Official data on Friday showed that the U.S. economy added just 69,000 jobs in May, far below expectations for a gain of 150,000, while the unemployment rate ticked up to 8.2% from 8.1%.
The disappointing data fuelled speculation over the prospect for a third round of quantitative easing from the U.S. central bank.
Investor sentiment was also buoyed after Portugal’s finance minister said earlier that the country’s EUR78 billion bailout program was on track, but investors remained cautious amid fears that Spain’s high borrowing costs will force Madrid to seek a bailout.
Trade volumes remained thin on Monday, as markets in the U.K. were closed for the Queen’s jubilee.
Meanwhile, investors were looking ahead to the Bank of Canada’s policy meeting on Tuesday, amid speculation that the central bank may indicate that it is considering a rate hike in the coming months.
The loonie, as the Canadian dollar is also known, was slightly lower against the euro, with EUR/CAD adding 0.12% to hit 1.2959.
Later Monday, the U.S. was to release official data on factory orders.
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