USD/CAD jumps to over one-month tops ahead of Canadian and US jobs report

The USD/CAD pair was seen building on overnight strong gains and is now inching towards the 1.2600 handle, highest since late August. 

On Thursday, the pair rallied around 125-pips after Canadian trade balance data showed larger-than-expected deficit. Continuous downward trend in Canadian exports indicated that the economy might be cooling down after an impressive first half of 2017 and weighed heavily on the CAD.

   •  Canada: GDP growth has peaked - HSBC

On the contrary, the US economic data reaffirmed market expectations for a third Fed rate hike move in 2017 and provided an additional boost to the ongoing greenback rally. The US Dollar rose to near seven-week highs on hopes for progress over the US tax reforms and further collaborated to the pair's strong up-move.

   •  DXY firmer, approaching 94.00 ahead of NFP

Meanwhile, the market seems to have largely ignored overnight up-move in crude oil prices, which tends to boost demand for the commodity-linked currency - Loonie, with the USD price dynamics acting as an exclusive driver of the pair's bullish momentum to over five-week tops. 

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Today's key focus would be on Canadian and the US jobs report (NFP), which would help investors determine the next leg of directional move for the major.

   •  USD/CAD showing tentative signs of topping out - Westpac

Technical levels to watch

Momentum beyond the 1.2600 handle is likely to get extended towards 1.2620 level, above which the pair is likely to dart towards its next major hurdle near the 1.2665-80 region.

On the flip side, 1.2565-60 area now seems to protect immediate downside, which if broken could drag the pair back towards the key 1.25 psychological mark en-route 1.2475 horizontal support.