USD/CAD struggles above 1.3600 as US slowdown risks easing

• USD/CAD aims to break above 1.3600 on upbeat US jobs data for September.
• Traders see the Fed gradually cutting interest rates.
• The Canadian dollar remains under pressure despite oil prices rising to a fresh five-week high.

The USD/CAD pair is gathering strength to break through the resistance at the 1.3600 round level in the European session on Monday. The Loonie asset is extending its winning streak for the fourth trading session as the US dollar (USD) gains further on expectations that the Federal Reserve (Fed) will not extend its policy easing period with an aggressive approach.

S&P 500 futures posted significant losses in the European session, showing doomsday sentiment in the market. The US Dollar Index (DXY), which tracks the greenback against six major currencies, is holding on to gains near 102.50.

Investors expect the Fed to pursue a gradual rate-cutting cycle as risks of an economic slowdown in the United States (US) economy eased after the jobs report showed that job demand remained robust, and wage growth was faster than forecast in September.

The US economy expanded by 254,000 in September after an addition of 159,000 job seekers in August, according to Nonfarm Payrolls (NFP). Annual average hourly earnings rose 4%, faster than estimates of 3.8%.

This week, investors will pay close attention to US consumer price index (CPI) data for September, which will be released on Thursday.

Meanwhile, the Canadian dollar (CAD) is underperforming its majors despite rising oil prices. The price of oil is hitting a new five-week high due to the Israel-Iran war, which has raised risks of disruption to the oil supply chain.

It is worth noting that Canada is the leading exporter of oil to the US, and higher energy prices result in an appreciation of the Canadian dollar.