USD/CAD inter-market: Sell the rallies ahead of NFP?

USD/CAD is seen struggling to sustain gains above 1.32 handle so far this week, after having staged a solid rebound from 1.3065 levels on Monday.

On Thursday, the major tries another attempt to extend beyond 1.3200 levels, while oil remains underpinned by last week’s OPEC deal and US crude stocks draw, which continues to lend support to the resource-linked Loonie and thus, keeps a check on USD/CAD.

The gains in the major also remains capped amid a turnaround in risk sentiment after the European stocks fell back in the red. The CBOE VIX index, risk barometer, rallies 4% to trade at session tops, indicating risk-off persists at full steam. While increased nervousness heading into the employment data due tomorrow from both the North American economies, also weighs on USD/CAD somewhat.

However, the USD/CAD pair manages to hold gains, as the bulls find support from persistent broad based US dollar strength, in wake of stronger US fundamentals, which bolsters the case for a Fed rate hike this year. The CME Fed Watch tool now shows that probability of a Fed rate hike in Dec stands at 51.7%.