USD/CAD looks to gather traction near 1.3100, GDP eyed

The Canadian Dollar is trading on firm fashion on Tuesday, dragging USD/CAD briefly below the key support at 1.3100 the figure during overnight trade.

USD/CAD attention to data

The pair is now retreating for the second consecutive session, eroding part of last week’s recovery and re-focusing on the area of recent lows near the psychological support at 1.3000 as USD sellers seem to have returned to the markets.

Uncertainty around Trump’s future policies plus increasing unease on measures already taken by his administration keeps the pressure on the buck and continues to cap any bullish attempt.

Spot continues to look to the yield spread differentials between the US and Canadian money markets as the almost exclusive driver of the pair’s price action, as the correlation with crude oil dynamics seems to have ebbed as of late.

On the data front, Canadian GDP figures are expected to show the economy has expanded 0.3% in December, while the S&P Case-Shiller Index, Chicago PMI, CB’s Consumer Confidence and Q4 Employment Cost Index are all expected later in the US docket.

In the meantime, CAD appears supported from the positioning side, as speculative net longs have re-emerged for the first time since September 20 according to the latest CFTC report and during the week ended on January 24.

USD/CAD significant levels

As of writing the pair is losing 0.09% at 1.3108 and a breach of 1.3051 (low Jan.26) would aim for 1.3016 (low Jan.17) and then 1.3002 (low Oct.19). On the upside, the next barrier lines up at 1.3171 (high Jan.30) followed by 1.3186 (20-day sma) and finally 1.3293 (100-day sma).