USD/CAD up smalls around 1.2900, FOMC, data eyed
- Pair’s upside capped in the 1.2915/20 band so far.
- CAD lost 8 big-figures since September’s 2017 tops.
- Poor GDP figures (Tuesday) accelerated the upside.
- US ISM, FOMC to drive sentiment near term.
The greenback is extending its upbeat momentum vs. its Canadian peer on Wednesday, now taking USD/CAD to the area of recent tops in the 1.2900 neighbourhood.
USD/CAD attention to FOMC, US data
The pair is gaining ground for the third session in a row so far today, recently boosted by lower-than-expected GDP figures in the Canadian economy for the month of September (released yesterday).
Tuesday’s GDP figures somewhat reinforced the cautious stance from the Bank of Canada at its meeting last week, and appear to have diminished as well the chances of another rate hike in early 2018.
Further out, yield spread differentials in the US-CA money markets continue to drive the sentiment around the pair and so far keeps favouring the greenback.
It will be a key day for the buck, as the critical ISM manufacturing is due later in the NA session preceding the FOMC meeting. It is worth mentioning that market consensus expects the Fed to keep rates on hold, while CME Group’s FedWatch tool currently estimates the probability of higher rates in December at nearly 97%.
USD/CAD significant levels
As of writing the pair is up 0.02% at 1.2891 facing the initial hurdle at 1.2918 (high Oct.27) seconded by 1.2927 (50% Fibo of the 2017 drop) and finally 1.3006 (200-day sma). On the flip side, a breach of 1.2751 (10-day sma) would aim for 1.2722 (38.2% Fibo of the 2017 drop) and then 1.2621 (21-day sma).