- Fundamentals take a back seat to risk appetite.
- Retail Sales miss has little effect.
- CAD CPI slated for Friday, 13:30 GMT.
USD/CAD saw a volatile Thursday session but wound up making little headway and is currently trading just above the 1.2700 level in the overnight session.
Market sentiment was the main driver yesterday as the US Dollar pumped and dumped against the Loonie, and a miss for Canadian Retail Sales did little to affect the pair with risk appetite already determining the direction of global markets.
Friday will see Canadian CPI figures at 13:30 GMT and median market estimates forecast of 1.4% are calling for a slight decline in price growth compared to the previous reading of 1.9%.
The Bank of Canada (BOC) is expected to hold rates steady at their March meeting, with analysts at Rabobank anticipating a 25bp increase to 1.5% in mid-April; USD/CAD had diverged from interest rate differentials in early February but with the US Dollar rallying the pair has come back to form, as price action returns to underlying fundamentals.
USD/CAD Technicals
The 1.2700 handle is of particular significance, marking the 200-day SMA and a decisive break and hold of this region will see the formation of a new major bull trend going forward. The latest push upwards saw the pair break above the 61.8 Fibo level of 1.2673, and resistance is currently sitting at 1.2910 while support builds up from 1.2614 to 1.2555.
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