USD/CAD loses traction, back below 1.3100

After reaching fresh highs in the 1.3130 area, USD/CAD has now slipped back to sub-1.3100 levels albeit still keeping the positive note.

USD/CAD up on USD buying

The pair rallied to daily highs above the 1.3100 handle earlier today backed by quite a strong rebound in the buck and rising yields in the US money markets, which in turn widened the spreads vs. their Canadian peers.

Collaborating with the correction lower, CAD is deriving some support from the better sentiment around crude oil prices - the West Texas Intermediate is trading in daily highs below the $54.00 mark per barrel – although its correlation has ebbed somewhat in recent weeks.

In the US data space, Markit’s Services PMI is expected to come in at 55.1 for the current month, surpassing initial estimates. Further data saw December’s trade surplus widening to $65 billion and Initial Claims rising more than forecasted to 259K WoW.

USD/CAD significant levels

As of writing the pair is gaining 0.15% at 1.3090 facing the next resistance at 1.3131 (high Jan.26) followed by 1.3167 (high Jan.25) and finally 1.3231 (20-day sma). On the flip side, a breach of 1.3053 (low Jan.25) would aim for 1.3016 (low Jan.17) and then 1.3002 (low Oct.19).