• Softer Canadian CPI print/retail sales prompt aggressive short-covering move in the last hour.
• Resurgent USD demand provides an additional boost, albeit offset by a pickup in oil prices.
The USD/CAD pair rallied over 90-pips and surged through the 1.3100 handle to over one-month tops post-Canadian macro data.
Data released from Canada showed consumer inflation decelerated to 2.2% y/y rate in September, falling 0.1% m/m. Adding to this, monthly retail sales also fell short of consensus estimates and exerted some intense selling pressure around the Canadian Dollar.
This coupled with a goodish US Dollar rebound, supported by an uptick in the US Treasury bond yields, further collaborated to the pair's sharp spike to the highest level since September 11. The pair built on its positive move beyond 100-day SMA, albeit now seems to have stalled near the 1.3120 region.
A sudden pickup in crude oil prices was seen underpinning the commodity-linked currency - Loonie and turned out to be the only factor keeping a lid on any strong follow-through momentum, at least for the time being.
With today's key data out of the way, traders now look forward to the Atlanta Fed President Raphael Bostic's scheduled speech for some fresh impetus and in order to grab short-term opportunities on the last trading day of the week.
Technical levels to watch
A follow-through buying has the potential to continue lifting the pair further towards 1.3160-65 supply zone en-route the 1.3200 round figure mark. On the flip side, 100-day SMA, currently near the 1.3065 region, now seems to protect the immediate downside, below which the pair could slide back towards the key 1.30 psychological mark.
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