USD/CAD retreats from daily tops, US ISM on sight

After climbing to the vicinity of the 1.2520 region in early trade, USD/CAD has now receded to the 1.2500 neighbourhood although keep the upbeat sentiment for the time being.

USD/CAD focus on US data

The pair is up for the second straight session so far on Monday, testing the area of recent highs above the 1.2500 handle, levels last seen in early September.

CAD stays on the defensive in response to a pick up in US yields, widening the spread differential vs. their Canadian peers.

In addition, CAD is deriving extra selling pressure in response to today’s sharp decline in crude oil prices, where the barrel of West Texas Intermediate is losing more than 2% around $50.50 at the time of writing.

On the positioning front, speculators kept building their net longs in CAD during the week ended on September 26, taking them to levels last seen in early November 2012, as shown by the latest CFTC report.

In the data space, September’s ISM manufacturing, Markit’s manufacturing PMI and the speech by Dallas Fed R.Kaplan (voter, hawkish) are all expected in the US later in the session along with RBC’s manufacturing PMI in Canada.

USD/CAD significant levels

As of writing the pair is gaining 0.34% at 1.2511 facing the next up barrier at 1.2525 (high Oct.2) seconded by 1.2530 (high Sep.29) and finally 1.2664 (high Aug.31). On the downside, a drop below 1.2414 (low Sep.29) would aim for 1.2388 (10-day sma) and then 1.2299 (21-day sma).