USD/CAD remains depressed below 1.2600 mark, moves little post-US ADP report

• USD/CAD maintained its offered tone through the early North American session.
• The USD struggled to preserve modest intraday gains after the dismal ADP report.
• An uptick in oil prices underpinned the loonie and contributed to the selling bias.

The USD/CAD pair remained depressed near the lower end of its weekly range, around the 1.2585-80 region and failed to gain any respite from the disappointing release of the US ADP report.

The monthly data published by the Automatic Data Processing (ADP) Research Institute revealed that the US private-sector employers added 374K jobs in August. This was well below consensus estimates pointing to a reading of 613K and was accompanied by a downward revision of the previous month's figure to 326K.

The data might have forced investors to further push back expectations about the likely timing of the Fed's tapering plan and was evident from a modest pullback in the US Treasury bond yields. This, in turn, undermined the US dollar, which reversed its modest intraday gains and acted as a headwind for the USD/CAD pair.

Apart from this, the prevalent risk-on mood – as depicted by a generally positive tone around the equity markets – further weighed on the safe-haven greenback. Conversely, an uptick in crude oil prices extended some support to the commodity-linked loonie and further contributed to the offered tone surrounding the USD/CAD pair.

Next on tap will be the release of the US ISM Manufacturing PMI. This, along with the US bond yields, might influence the USD and provide some impetus to the USD/CAD pair. Traders will further take cues from headlines coming out of the OPEC+ meeting and oil price dynamics to grab some short-term opportunities on Wednesday.

Technical levels to watch