- USD / CAD gained positive traction for the second day in a row on Wednesday.
- Weaker oil prices undercut the loonie and acted as a tailwind for the pair.
- The underlying bullish tone of the USD continued to support the intraday bullish move.
- Mixed data from the Canadian CPI / US housing market did little to give momentum.
The pair USD / CAD it caught some offers during the early American session and shot to the 1.2600 area or new weekly highs in the last hour.
The pair gained some positive traction on Wednesday and built on the good bounce the day before from levels below the key psychological level of 1.2500. A softer tone around crude oil prices undermined the commodity-pegged Canadian dollar and turned out to be a key factor acting as a tailwind for the USD / CAD pair. However, the rally lacked strong bullish conviction amid some profit-taking in US dollars from a 16-month high hit today.
On the economic data front, the headline Canadian CPI rose 0.7% in October from 0.2% previously, while the annual rate accelerated to 4.7% from 4.4% in September. Meanwhile, the Bank of Canada’s core CPI rose at a 3.8% year-on-year rate compared to estimates of a drop to 3.5% from the previous 3.7%. From the US, disappointing numbers for housing starts was largely offset by an unexpected increase in building permits and did little to provide a significant boost.
That said, the prevailing cautious climate in equity markets, coupled with optimistic expectations from the Fed and high yields on US Treasuries continued to provide some support for the dollar. This, in turn, was seen as a key factor that provided further momentum to the USD / CAD pair, and the bulls are now looking to rebound and take advantage of the momentum beyond 1.2600.
Technical levels
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