USD/CAD moves beyond 1.2900, 3-month peaks

• Spot trades higher on upbeat US GDP.
• US-CA yield spreads keep driving sentiment.
• US consumer sentiment next on tap.

The greenback keeps the solid pace vs. its Canadian counterpart at the end of the week, boosting USD/CAD to test fresh multi-month tops above the 1.2900 handle.

USD/CAD bid on data

The pair’s march north remains unabated for the time being, trading in levels last seen in July and just pips away from the 50% Fibonacci retracement of the 2017 down move (1.2927), which emerges as the next interim resistance.

Spot keeps looking to the spread differential in yields of the Canadian and US money markets for direction, especially in the shorter end of the curve.

The recent cautious stance from the BoC vs. the prospects of extra tightening by the Federal Reserve keeps favouring the buck for the time being, although both economies show strong fundamentals and speculations of a rate hike by the BoC in early 2018 has started to gain traction among investors.

In the data space, USD stays bid after flash US GDP figures signalled the economy is seen expanding 3.0% on a yearly basis, coming in above expectations.

USD/CAD significant levels

As of writing the pair is up 0.49% at 1.2909 facing the initial hurdle at 1.2927 (50% Fibo of the 2017 drop) followed by 1.3000 (psychological handle) and finally 1.3010 (200-day sma). On the flip side, a breach of 1.2646 (10-day sma) would aim for 1.2570 (10-day sma) and then 1.2431 (low Oct.12).