USD/CAD testing session highs near 1.3260 ahead of BoC

The greenback keeps the upbeat tone vs. its neighbour peer at the beginning of the week, taking USD/CAD to post moderate gains in the mid-1.3200s for the time being.

USD/CAD looks to BoC, Fedspeak 

The softer tone in crude oil prices is removing some tailwinds from CAD, with the West Texas Intermediate shedding nearly 2% around the $53.00 mark per barrel and adding to the pair’s up move.

Furthermore, the solid momentum in US yields vs. its Canadian peer – particularly in the shorter end of the curve – continues to underpin the daily upside.

Spot is thus advancing for the second straight session after bottoming out in 3-week lows around 1.3170 following auspicious report from Canadian labour market figures seen last Friday.

Later in the session the BoC will publish its Business Outlook Survey for the fourth quarter. Strategists at TD Securities noted “We expect the BOS to reveal an upbeat assessment of business conditions and a continuing recovery in the resource sector. After noting that activity had bottomed out by Q3, capex plans for energy producers have affirmed that view with many slated to increase investment in 2017”.

In the US docket, the Fed’s Labor Market Conditions Index is due next followed by speeches by Atlanta Fed Dennis Lockhart (centrist, non voter) and Chicago Fed Charles Evans (voter, dovish).

USD/CAD significant levels

As of writing the pair is gaining 0.22% at 1.3266 and a breakout of 1.3311 (38.2% Fibo of the 2016 drop) would open the door to 1.3394 (20-day sma) and finally 1.3463 (high Jan.3). On the other hand, the immediate support aligns at 1.3174 (low Jan.6) ahead of 1.3120 (3-month support line) and then 1.3099 (200-day sma).