USD/CAD stays in tight range above 1.3450 ahead of NFP data

• WTI stages small rebound following yesterday's sharp drop.
• US Dollar Index stays within a touching distance of 98.
• Coming up: April nonfarm payrolls report from the U.S.

After dipping below the 1.34 handle earlier in the week, the USD/CAD pair closed the last two trading days in the positive territory boosted by a combination of a weaker loonie amid falling crude oil prices and a stronger USD. With investors moving to the sidelines ahead of the day's critical employment data from the United States, the pair is virtually unchanged on a daily basis at 1.3470.

Rising oil production in the U.S. and comments from Iranian oil minister about the possibility of OPEC collapsing because of "unilateralism" weighed on crude oil prices on Thursday and forced the WTI slump to its lowest level in more than three weeks with a daily loss of more than 3%, hurting the demand for the commodity-sensitive loonie.

On the other hand, the greenback preserved its strength after making a late run higher on Wednesday on the back of FOMC Chairman Powell's optimistic remarks about the economic outlook and the US Dollar Index continued to erase this week's losses to provide additional support to the pair. 

In the second half of the day, the nonfarm payroll report from the U.S. will be looked upon for fresh impetus. Although the headline NFP reading is expected to retreat to 185K in April from 196K in March, the main focus will be on the wage inflation data especially after yesterday's data showed that unit labour costs in the first quarter declined by 0.9%.

Previewing today's labour market report, "while we expect a minor rebound in manufacturing jobs following two disappointing payroll prints, this is likely to be more than offset by a deceleration back to trend in job creation in the services sector, following a stronger-than-expected bump in March," TD Securities analysts said. "That said, the blowout ADP employment report creates upside risks for another stronger-than-expected pace of service sector job creation in April.”

Technical levels