USD/CAD jumps to 1.2600 neighbourhood, fresh weekly top

• USD/CAD gained positive traction for the second successive day on Wednesday.
• Weaker oil prices undermined the loonie and acted as a tailwind for the major.
• The underlying USD bullish tone remained supportive of the intraday move up.
• Canadian CPI/mixed US housing market data did little to provide any impetus.

The USD/CAD pair caught some bids during the early North American session and shot to the 1.2600 neighbourhood or fresh weekly highs in the last hour.

The pair gained some positive traction on Wednesday and built on the previous day's goodish rebound from levels below the key 1.2500 psychological mark. A softer tone around crude oil prices undermined the commodity-linked loonie and turned out to be a key factor that acted as a tailwind for the USD/CAD pair. The uptick, however, lacked strong bullish conviction amid some US dollar profit-taking from a 16-month peak touched earlier today.

On the economic data front, the headline Canadian CPI rose 0.7% in October from 0.2% previous, while the yearly rate accelerated to 4.7% from 4.4% in September. Meanwhile, the Bank of Canada's core CPI edged higher to 3.8% YoY rate as against estimates for a dip to 3.5% from 3.7% previous. From the US, the disappointment from Housing Starts was largely offset by an unexpected rise in Building Permits and did little to provide any meaningful impetus.

That said, the prevalent cautious mood around the equity markets, along with hawkish Fed expectations and elevated US Treasury bond yields continued lending some support to the greenback. This, in turn, was seen as a key factor that provided a fresh lift to the USD/CAD pair, with bulls now looking to reclaim and build on momentum beyond the 1.2600 mark.

Technical levels to watch