USD/CAD hits fresh daily highs above 1.3350 on a quiet session ahead of key data

• US Dollar up modestly amid higher US yields ahead of Fed and key data.
• Equity and crude oil prices trim losses during the American session.
• USD/CAD holds above 1.3300, risks remain tilted to the downside.

The USD/CAD peaked during Monday’s American session at 1.3357, the highest level since Thursday. It is hovering around 1.3350, slightly away from the critical support area of 1.3300.

The January low around 1.3300 is the key level to the downside: a break lower could open the doors to an extension toward to 1.3220 (November low) and the 200-day Simple Moving Average (SMA) today at 1.3204. On the upside, a consolidation above 1.3360 would set the attention on 1.3400 and the 20-day SMA at 1.3420.

The US Dollar is rising on Monday amid higher US yields and risk aversion. The 10-year Treasury yield stands at 3.54% and the 2-year at 4.26%, the highest since January 12. The Dow Jones is falling by 0.39% and the Nasdaq slides by 1.48%.

Price action remain limited on Monday ahead of busy days. On Tuesday, Canada will report November GDP data, expected at 0%. Analysts at TD Securities look for a flat print on industry-level GDP with a muted performance across both goods and services “with new flash estimates expected to show a modest expansion in December.” They point out the “ultra sensitivity to data releases is on hold” with the Bank of Canada moving towards a pause. “We expect cuts to start in January and expect the data to deteriorate in the coming months.”

In the US will be a busy week, with the FOMC meeting on Wednesday and the Non-farm payrolls report on Friday. The Federal Reserve is expected to raise interest rates by 25 basis points. Fed’s outlook will be critical and could trigger volatility across the FX board.

Technical levels