USD/CAD trading into 1.2850 ahead of BoC's Poloz speech
- US Dollar continuing to make headway against the Loonie as bond yields buoy the Greenback higher.
- Receding oil on evaporating market tensions and a dovish BoC are contributing to CAD weakness ahead of the BoC's Poloz.
The USD/CAD is trading higher in Asia, reaching back into the 1.2850 region near yesterday's highs.
The US Dollar froze against the Loonie on Tuesday after advancing for four straight days, but the upward momentum continues against the CAD as 10-year US Treasuries hit the critical 3% yield mark and oil slides on still-expanding US crude oil supply and decelerating Middle East tensions.
The USD/CAD declined rapidly from March's high of 1.3125 as the USD swooned and the CAD spiked on rallying oil prices spurred on by the hope that OPEC-led efforts to clamp down on oil production were finally starting to draw down supply from the US, and Middle East tensions over Syria sent crude higher. Tensions have broken over the Middle East without an altercation between the US and Russia, and the US is still on pace to produce more oil than any other country within the next few years, and the CAD is dropping away once more as the USD gets bolstered higher by traders fearful of the US Treasury yields with the 10-year note bumping into the 3% key level.
Wednesday sees a speech from the Bank of Canada's (BoC) Governor Poloz at 20:15 GMT. The BoC turned unexpectedly dovish on rate hikes last week, sending Loonie bulls scurrying and contributing to the CAD's recent weakness. Traders will be looking to Poloz's talking points to see what the BoC has in the pipe for rate hikes looking forward.
USD/CAD Levels to watch
The pair is once again trading back over its 200-day SMA which sits near 1.2625, and the current run-up is getting tangled in the 50.0 Fibo level of March's decline, which could firm up into support for the pair from 1.2830, while the pair also faces stiff resistance from the 1.2900 major psychological level that kept the action capped in the last quarter of 2017.