USD/CAD struggles to regain the 1.4000 level on risk-off markets

• The US Dollar is trimming losses and attempts to return above 1.4000 against the CAD.
• Tuesday's bearish engulfing candle on the daily chart suggests growing negative pressure.
• The CAD has been drawing some support from the recovery of Oil prices.

The US Dollar is trimming some losses against its Canadian Counterpart on Wednesday and trades right at the 1.4000 level, after bouncing from lows near 1.3970 on Tuesday. The risk-averse mood is providing some support to the Greenback, but the recovery attempt remains frail so far, following a 0.5% sell-off on Tuesday.

US employment data added to evidence of a stalled labour market, and heightened hopes of a Federal Reserve interest rate cut at its December meeting, which hit the US Dollar across the board. The bearish engulfing candle on the daily chart is a negative sign and strengthens the case for a deeper correction from multi-month highs, near 1.4150.

US data keeps pointing to a weak labour market

The US Labour Department released its first report after the US government shutdown that revealed an increase in Initial Jobless Claims to 232,000, while continuing claims rose to 1,957 million in the week of October 18.

Apart from that, ADP released its Weekly Employment Change report, which showed that US businesses continued laying off workers at an average weekly pace of 2,500 in the four weeks ending on November 1. These figures improve the 11,250 average job losses of the previous week but still hint at a weakening labour market.

The Canadian Dollar, on the other hand, is drawing support from a gradual increase in Crude Prices, Canada's main import. The US Benchmark WTI is ticking down to levels around $60.25 on Wednesday, but still holds most of the gain taken over the last four trading days, on a rebound from lows near $58.00.