USD/CAD extends steady decline ahead of key Canadian data

The USD/CAD pair extended its steady decline through mid-European session and is currently placed near session lows in the 1.2260-70 band. 

Despite Thursday's upbeat US economic data and increasing prospects for another Fed rate hike action in 2017, escalating tensions between the US and North Korea weighed on market sentiment and kept the US Dollar on the back foot.

This coupled with a mildly positive trading sentiment around crude oil prices was seen lending support to the commodity-linked currency - Loonie and further collaborated to the pair's offered tone on the last trading day of the week.

Today's release of Canadian inflation figures and monthly retail sales would now be looked upon to reaffirm that the Canadian economy is strengthening and raise prospects for a third BoC rate hike move by the end of this year. 

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Traders on Friday will also confront the release of Baker Hughes report on the weekly US rig count data, later during the NY trading session.

The key focus, however, would be on the outcome of major oil producers meeting in Vienna, where a possible announcement on extension of oil production cuts beyond March would pave way for extension of the pair's well established bearish trend. 

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Technical levels to watch

Immediate support is pegged near mid-1.2200s, below which the pair is likely to accelerate the slide towards the 1.2200 handle en-route 1.2160-55 support. On the upside, any recovery attempts might now confront fresh supply near the 1.2300 handle, which if cleared could lift the pair back towards 1.2330-40 zone.