USD/CAD surrenders a major part of early gains to mid-1.2800s
| • Fails to build on early uptick amid a mildly weaker USD/subdued US bond yields.
• Positive oil prices provide an additional boost to Loonie and add to the pressure.
• Today’s Canadian macro data might provide some fresh directional impetus.
The USD/CAD pair reversed a major part of its early gains and has now retreated over 30-pips from an intraday high level of 1.2847.
Negotiators failed to reach a workable deal on Thursday - a deadline set by congressional Republicans and was seen as one of the key factors prompting behind the pair’s sharp intraday rebound of around 70-pips.
Diminishing prospects of rewriting the North American Free Trade Agreement (NAFTA) this year initially helped the pair to build on overnight up-move from mid-1.2700s and move back above 50-day SMA during the Asian session on Friday.
The up-move, however, lacked any strong follow-through momentum amid a mildly softer US Dollar tone, led by subdued action around the US Treasury bond yields. This coupled with positive crude oil prices further underpinned the commodity-linked currency - Loonie and collaborated to the pair's retracement slide back closer to the 1.2800 handle.
Moving ahead, investors now look forward to important Canadian macro releases - the latest consumer inflation figures and monthly retail sales data, for some meaningful impetus later during the early NA session.
Technical levels to watch
A follow-through retracement below the 1.2800 mark might turn the pair vulnerable to head back towards testing the 1.2750-45 intermediate support before eventually dropping to test 100-day SMA support near the 1.2700-1.2690 region.
On the flip side, bulls will be eyeing for a sustained move beyond mid-1.2800s, above which the pair is likely to aim towards surpassing the 1.2900 handle and head towards testing its next major hurdle near the 1.2940-45 supply zone.
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