After advancing to fresh YTD peaks near 1.3760 on Tuesday, USD/CAD is now fading part of that spike and navigates around 1.3730/20.
USD/CAD now looks to data, oil
CAD derived extra selling pressure following the sharp drop of crude oil prices on Tuesday, with the barrel of West Texas Intermediate deflating to lows in the $49.30 region respite the API’s reported a larger-than-expected build in supplies of 4.2 million barrels during last week.
Adding to CAD weakness, yields in the Canadian money markets, particularly in the shorter end of the curve, have plummeted to yearly lows and widened the spread vs. their American peers. The divergence in policy between the Federal Reserve and the Bank of Canada has probed quite a solid driver for the pair in recent weeks.
In the data space, the FOMC meeting will be the salient event, seconded by the ADP report (180K exp.) and the ISM Non-manufacturing (55.8 exp.).
USD/CAD significant levels
As of writing the pair is advancing 0.06% at 1.3721 facing the next up barrier at 1.3759 (2017 high May 2) seconded by 1.3861 (high Feb.24 2016) and then 1.4017 (high Feb.11 2016). On the downside, a break below 1.3647 (low May 2) would open the door to 1.3632 (23.6% Fibo of the Apri-May rally) and finally 1.3554 (38.2% Fibo of the April-May rally).