USD/CAD upside stalled near 1.2550, BoC on sight

The Canadian Dollar stays sharply lower vs. its American neighbor at the beginning of the week, now sending USD/CAD to the area of daily in the mid-1.2500s.

USD/CAD bid on data

The pair is trading in fresh 4-day tops near 1.2550 after US NY Empire State manufacturing index came in above expectations for the current month at 30.20, up from September’s 24.40.

Further data saw Canadians purchasing $12.04 billion of foreign securities in August, while foreigners purchased $9.85 billion of Canadian securities during the same period.

CAD remains depressed following today’s poor performance in yields of the Canadian 10-year benchmark, dropping to the 2.01% neighbourhood, all opposed to the US peers, trading just below 2.30%.

Looking ahead, CAD should remain under scrutiny as the Bank of Canada will publish its Fall Business Outlook Survey (BOS). According to strategists at TD Securities, “The BOS will give an update on business sentiment and provide an outlet for firms to address any challenges they have encountered in the last three months. In particular, we will be watching for any mention of currency headwinds and/or growing concern over trade protectionism. The BOS will also give an update on firm-level pricing pressures and capital spending intentions, the latter of which the Bank has talked up as a key source of strength going forward

USD/CAD significant levels

As of writing the pair is gaining 0.26% at 1.2525 facing the next up barrier at 1.2545 (high Oct.16) seconded by 1.2599 (high Oct.6) and finally 1.2664 (high Aug.31). On the downside, a drop below 1.2439 (21-day sma) would aim for 1.2431 (low Oct.12) and then 1.2253 (low Sep.22).