USD/CAD off highs, back to 1.3240

After surpassing the 1.3250 level earlier in the session, USD/CAD has now lost some momentum and is now receding to the 1.3240 region.

USD/CAD weaker on BoC, focus on CPI

The pair is seeing some respite today after two consecutive weeks with losses. Recall that CAD intensified its gains after the BoC shifted to a more aggressive message following last week’s speeches by C.Wilkins and Governor S.Poloz.

Market participants have even commenced to price in the likeliness of a rate hike by the Bank of Canada at some point in the fourth quarter, while Canadian fundamentals seem to be turning more constructive and adding to this view.

The up move in CAD has been sustained further by a moderate rebound of yields in the Canadian money markets, wit the 2-year benchmark now returning to sub-0.90% levels after reaching the vicinity of 0.94% on Thursday.

Adding to CAD upbeat momentum, speculative net shorts have retreated to 5-week lows during the week ended on June 13 as shown by the latest CFTC report. 

Later in the week, the most relevant event in Canada will be the release of the inflation figures for the month of May, expected on Friday. In the US, Fedspeak should grab all the attention following the recent rate hike by the Federal Reserve.

USD/CAD significant levels

As of writing the pair is gaining 0.23% at 1.3242 facing  the next hurdle at 1.3310 (high Jun.15) followed by 1.3339 (200-day sma) and then 1.3404 (38.2% Fibo of the May-June drop). On the downside, a break below 1.3163 (low Jun.14) would open the door to 1.3007 (low Feb.16) and finally 1.2967 (2017 low Jan.31).

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