USD/CAD firmer, retakes 1.2800 and above

• Spot advances to daily highs above the 1.2800 handle.
• Canadian CPI matched prior surveys during October.
• US-CA spreads keep favouring the buck.

Another bout of fresh selling orders is now hitting the Canadian Dollar and pushing USD/CAD further north of the critical 1.2800 handle on Friday.

USD/CAD weaker post-data, looks to yields

The pair is now recording fresh 2-week peaks beyond 1.2800 the figure and at the same time reverting a 2-week negative streak.

CAD deflated further after Canadian inflation figures failed to surprise markets to the upside during last month, falling in line with initial forecasts. The results added to the cautious stance from the Bank of  Canada, as per recent comments, motivating sellers to step in help spot move further up.

US-CA yields spread differentials continue to drive the sentiment around spot in detriment of crude oil dynamics, particularly in the shorter end of the curve. In this regard, spreads in the 2-year reference remain in multi-month highs.

Another source of potential weakness for CAD lies ahead in the short term, as another round of NAFTA talks this week failed to yield any progress, all amidst news citing a probable alliance between Canada and Mexico against the protectionist plan from the Trump’s administration.

USD/CAD significant levels

As of writing the pair is gaining 0.48% at 1.2818 facing the initial hurdle at 1.2918 (high Oct.27) seconded by 1.2927 (50% Fibo of the 2017 drop) and finally 1.2985 (200-day sma). On the downside, a breach of 1.2664 (low Nov.19) would aim for 1.2577 (100-day sma) and then 1.2521 (55-day sma).