USD/CAD advances to fresh weekly highs above mid-1.28s

US weekly jobless claims data beats expectations.
DXY sticks to gains near 2-week highs.
Oil struggles to stage a meaningful recovery.

Eren Sengezer FXStreet

After closing the previous day nearly 100-pips higher, the USD/CAD extended its gains on Thursday and reached its highest level since last Friday at 1.2860. As of writing, the pair was trading at 1.2856, gaining 0.54%, or 66 pips, on the day.

According to the data released by the US Department of Labor on Thursday, the number of Americans filing for unemployment benefits dropped to for the third straight week last week, coming in at 236K. The US Dollar Index eased from daily highs despite the upbeat reading but stays in the positive area a little below the fresh two week-high that it set at 93.78 earlier in the session. At the moment, the index is at 93.64, up 0.12% on the day.

Although the Canadian data revealed that the total value of building permits increased by 3.5% on a monthly basis in October, beating the market estimate of 1.5%, the loonie failed to take advantage and continued to weaken against the greenback. The barrel of West Texas Intermediate, which lost nearly $2.5 since the start of the week, is having a difficult time recovering its losses, not allowing the commodity-linked loonie to show resilience against its peers.

Later in the session, the Ivey PMI released by the Richard Ivey School of Business will be the only data to watch. However, even a robust reading from that data is unlikely to put the pressure under a noteworthy selling pressure as investors await tomorrow's NFP data.

Technical outlook

The immediate hurdle for the pair aligns at 1.2875 (200-DMA). A daily close above that level could open the door for further gains toward 1.2915 (Oct. 31 high) and 1.3000 (psychological level). On the downside, supports could be seen at 1.2800 (psychological level), 1.2760 (20-DMA) and 1.2710 (50-DMA). In the meantime, the RSI indicator on the daily graph still has some room on the upside before reaching the 70 mark, suggesting that the bullish momentum is likely to persist in the near-term.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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