USD/CAD clinches tops near 1.2980 ahead of US docket

• CAD depreciates to fresh lows near 1.30 the figure ahead of US data.
• BoC’s recent dovish tone, risk-off, weighs on CAD.
• US Philly Fed index, Empire State index next of relevance.

The Canadian Dollar is dropping to fresh daily lows vs. its American neighbour on Thursday and is helping USD/CAD to move to session peaks in the boundaries of 1.2980, closer to the psychological 1.30 milestone.

USD/CAD focused on US data

The pair is reverting yesterday’s pullback although it manages well to keep business in the upper end of the recent range and at shouting distance from recent YTD tops and critical barrier at 1.3000 the figure.

CAD remains on the defensive so far this week almost exclusively in response to the dovish message from Governor S.Poloz at his speech on Tuesday. It is worth mentioning that, in spite of staying optimistic on the outlook of the domestic economy, Poloz hinted at the possibility of further economic growth without lifting inflation.

In addition, US-CA yield spreads, particularly in the shorter end of the curve, keep favouring the buck and thus collaborating with the upside.

In the data space, US weekly Initial Claims are next on tap seconded by the Philly Fed and the Empire State regional manufacturing gauges. Additionally, the NAHB index is also due followed by TIC Flows. In Canada, ADP Non-farm Employment Change is only expected.

USD/CAD significant levels

As of writing the index is gaining 0.12% at 1.2972 and a breakout of 1.2986 (high Mar.13) would open the door to 1.3001 (2018 high Mar.5) and finally 1.3349 (high Jun.21 2017). On the downside, immediate contention emerges at 1.2907 (10-day sma) followed by 1.2803 (low Mar.12) and then 1.2722 (38.2% Fibo of the 2017 drop).