USD/CAD edging higher to 1.2920, session tops

The Canadian Dollar stays on the defensive on Tuesday, now helping USD/CAD to advance to the area of daily highs near 1.2920.

USD/CAD all the attention on BoC

After bottoming out in levels last seen in September 2016 in the 1.2860/50 band, the pair has sparked a tepid correction higher and is now navigating its second consecutive session with gains.

CAD appreciated nearly 7% since 2017 tops seen in May in levels just shy of 1.3800 the figure to Friday’s multi-month lows in the mid-1.2800s, largely due to the unexpected shift to a more hawkish tone from the Bank of Canada in past weeks, as per comments by Governor S.Poloz and other officials.

Adding to CAD momentum, recent Canadian docket showed auspicious figures and it all adds to the market perception that a rate hike could be in the pipeline as soon as at tomorrow’s key BoC meeting.

USD/CAD significant levels

As of writing the pair is gaining 0.24% at 1.2921 and a break above 1.2958 (10-day sma) seconded by 1.3016 (10high Jul.5) and then 1.3078 (23.6% Fibo of 1.3795-1.2857). On the downside, the immediate support lines up at 1.2857 (2017 low Jul.7) would open the door to 1.2818 (low Sep.7) and then 1.2759 (monthly low Aug.18 2016).