USD/CAD inter-markets: scope for further gains

USD/CAD is advancing for the fourth consecutive session so far today, gaining nearly 3 cents since Friday’s lows in the 1.2830/25 band. Data releases today have also helped spot to climb further, with ADP report beating consensus for the month of August and Canadian GDP figures showing mixed views.

The ongoing rally in the greenback following upbeat Fedspeak and Yellen’s hawkish speech at Jackson Hole plus the renewed weakness hitting crude oil prices remain the exclusive drivers behind the pair’s upside to levels above the 1.3100 handle.

In fact, the US Dollar Index retaking the 96.00 barrier and beyond in combination with the drop of the price for the barrel of West Texas Intermediate to the $46.00 area have all been collaborating with the current up move.

Fed Funds futures prices keep pointing north, trading in multi-day highs and giving further sustain to the USD’s upside momentum. According to CME Group’s FedWatch tool, the probability of a rate hike in September has now ticked higher to 24% and is at 44% for the month of December.

US and Canadian money markets are showing yields on the 2-year benchmark navigating daily lows, although the spread still favours the buck.

Next relevant target for the pair emerges at 1.3202, August’s top, followed by the key 200-day sma near 1.3290 and ahead of a retracement of the 2-16 drop at 1.3311.