USD/CAD continues to be pinned down as rally sellers remain in charge
The CAD now tops the major bloc, but just by a little as dollar strength retraces a little bit
The US dollar may be holding firm today, but the loonie is not backing down after last Friday's impressive employment numbers.
The release of the data saw a sharp decline in USD/CAD, and since then we've entered a consolidation phase again. The pair retraced some losses, but so far it's capped at the 1.2416 level - at the 38.2 retracement level from the sharp drop.
Sentiment right now still favours the CAD as market is looking to position and figure out any hints of a Bank of Canada rate hike next week. The latest data points combined with Poloz's "uncertain" element with regards to monetary policy changes is making for a very interesting trading opportunity in the CAD.
Right now, rally sellers are lurking nearby at 1.2416 and unless buyers can break through there - they will remain in control based on current price action. The OIS market prices an 80.8% probability that the Bank of Canada will hike rates next week - there's still a little more to be priced in if we get any hints from Poloz & co.
Do be on the look out for the Bank of Canada business outlook survey later today in the US session. If Poloz decides next week is time to raise rates, the first sign of any hints will come from this report.