USD/CAD tumbles to lows near 1.2820 ahead of US data

• The Canadian Dollar appreciates to the 1.2820 vs. the buck.
• Gains remain capped around weekly tops beyond 1.2900.
• Next of relevance will be US ISM Non-manufacturing and Trade Balance.

The renewed softer tone surrounding the greenback is now dragging USD/CAD to fresh session lows in the 1.2825/20 band.

USD/CAD now looks to US data

After three sessions in a row posting gains including weekly peaks beyond 1.2900 the figure, the pair is now giving up part of the recent advance and retraces to the 1.2820 area in response to the renewed offered bias around the buck.

Spot moves lower amidst falling US yields, as opposed to the recent pick up in yields in Canada, reducing the spread differential in favour of CAD. That, coupled with the recent surprise in Canadian GDP figures and speculations of two rate hikes by the BoC this year (July and October) has been lending support to the Canadian Dollar and somewhat limiting the pair’s upside.

Looking ahead, Canadian, US Trade Balance figures are due next ahead of Initial Claims, Factory Orders, Durable Goods Orders and the more relevant ISM Non-manufacturing.

USD/CAD significant levels

As of writing the index is retreating 0.40% at 1.2831 and a breakdown of 1.2801 (low May 2) would pave the way for a test of 1.2722 (38.2% Fibo of the 2017 drop) and then 1.2635 (200-day sma). On the other hand, the next hurdle is located at 1.2916 (high May 1) followed by 1.2927 (38.2% Fibo of the 2017 drop) and finally 1.2946 (high Apr.2).