• USD/CAD refreshed session lows following the release of softer US NFP report.
• A slight disappointment from Canadian employment details helped limit losses.
• A modest pick up in oil prices might underpin the loonie and cap any strong gains.

The USD/CAD pair dropped to fresh session lows, around the 1.3075 region post-US/Canadian jobs data, albeit quickly recovered few pips thereafter.

The US dollar weakened a bit in reaction to softer-than-expected headline NFP print, which came in to show that the US economy added 1.371 million jobs in August. Adding to this, the previous month's reading was marginally revised down to 1.734 million from 1.763 million reported earlier.

The negative print, to a larger extent, was offset by a sharp fall in the unemployment rate, which dropped to 8.4% during the reported month, surpassing even the most optimistic estimates. This, coupled with a strong pickup in the US Treasury bond yields, assisted the greenback to regain traction and extended some support to the USD/CAD pair.

On the other hand, the Canadian dollar trimmed a part of its early gains following a slight disappointment from the Canadian employment details. According to Statistics Canada, the number of employed people increased by 245.8K and the unemployment rate fell to 10.2% as against expectations of 275K and 10.1%, respectively.

However, a modest uptick in crude oil prices continued lending some support to the commodity-linked currency – the loonie. This, in turn, might keep a lid on any runaway rally for the USD/CAD pair, warranting some caution for bullish traders. The pair was last seen trading near the 1.3110-15 region and any subsequent positive move is likely to confront a stiff resistance near the overnight swing high, around the 1.3160-65 region, which should now act as a key pivotal point for short-term traders.

Technical levels to watch