USD/CAD in 3-month tops around 1.2820

• USD gains more traction on dovish ECB.
• US 10-year yields up 2 bp since daily lows in sub-2.41%.
• Fed Chief to be decided between Powell (dovish) and Taylor (hawkish).

The Canadian Dollar remains on the defensive so far this week, helping USD/CAD to gather extra upside momentum to levels beyond 1.2800 the figure.

USD/CAD in multi-month peaks

The pair is advancing uninterruptedly since last Thursday, gaining around four cents since monthly lows in the 1.2430 area seen during the past week.

The healthy upside in yields of the US money markets, particularly vs. their Canadian peers in the shorter end of the curve has been sustaining the up move in spot, while CAD has been practically bypassing the upside momentum around crude oil prices.

Furthermore, yesterday’s balanced statement from the Bank of Canada removed some tailwinds from further tightening in the very near term, although the door for extra rate hikes appears equally open. According to strategists at TD Securities, “Although we think the Bank is behind the curve on policy, the next hike by the Bank is less likely to arrive in December, with risks skewed more to January after today’s meeting”.

In the data space, US initial claims bettered expectations at 233K WoW earlier today while pending home sales came in flat during September, missing initial estimates.

USD/CAD significant levels

As of writing the pair is up 0.18% at 1.2817 facing the initial hurdle at 1.2828 (high Oct.26) seconded by 1.2927 (50% Fibo of the 2017 drop) and finally 1.3012 (200-day sma). On the flip side, a breach of 1.2649 (10-day sma) would aim for 1.2602 (10-day sma) and then 1.2431 (low Oct.12).