USD/CAD probing session lows near 1.2620 on data
- Oct US trade deficit wider than expected.
- Spot drops to 6-week lows.
- US ISM non-manufacturing next on tap.
The Canadian Dollar is prolonging the bullish momentum vs. its American neighbor on Tuesday, forcing USD/CAD to test the 1.2620 region, or fresh multi-week lows.
USD/CAD offered on data, yields
The pair dropped further on Tuesday and is down for the third session in a row. This time, CAD is grabbing extra attention after October’s trade deficit in Canada shrunk more than expected to $1.47 billion in October.
On the US side, the trade deficit widened to $48.7 billion during the same period vs. a $47.5 billion initially forecasted and September’s $44.9 billion deficit.
CAD is also deriving strength from US-CA yield spread differentials, as the Canadian 2-year benchmark is trading in multi-week peaks near 1.56%, levels last seen in early October.
Looking ahead, the greenback should stay under pressure in light of the publication of October’s ISM non-manufacturing as well as the services gauge by Markit. Later in the day, the API will release its weekly report on US crude oil supplies.
USD/CAD significant levels
As of writing the pair is losing 0.17% at 1.2654 facing the initial down barrier at 1.2624 (low Dec.5) seconded by 1.2568 (100-day sma) and then 1.2448 (low Oct.29). On the other hand, a break above 1.2722 (38.2% Fibo of the 2017 drop) would aim for 1.2747 (10/21-day sma) and finally 1.2849 (low Nov.30).