USD/CAD inter-market: Could swing back to 1.2900 on Canadian data

The USD/CAD pair reversed course this Friday, rising for the first time in ten trading sessions, as oil prices stalled the recent upsurge and turned negative on profit-taking. While a recovery staged by the greenback versus its major competitors, also underpinned the bounce in the CAD pair.

A glance at other intrinsics, the yield spread between the 10-year treasury and Canadian bond yields favours the US dollar, which also backs the case for the ongoing reversal in the major.

However, the pair appears to have got out of sync with the VIX, as the CBOE Volatility Index (VIX) rallies nearly 5%, suggesting risk-off moods persisting in full steam. Looking ahead, focus remains on the highly influential Canadian datasets, including the inflation and retail trade report due later in the NA session.

The USD/CAD pair is likely to extend its recovery mode towards 1.2900 and from there to 100-DMA now located at 1.2949, as the upcoming macro data is expected to disappoint markets and hence, will weigh negatively on the Loonie.