USD/CAD advances on dollar strength, nears 1.2600

• USD/CAD reverses Tuesday’s losses, reaches 1-month high
• BoC Wilkins due to speak tomorrow

USD/CAD advanced sharply on Wednesday and reached 1-month highs as the greenback strengthened across the board. 

The US dollar advanced versus most peers, even against commodity currencies and despite the better mood seen in financial markets. USD/CAD reversed yesterday’s losses and hit a peak of 1.2577 during the New York session. 

“The broader tone appears somewhat tentative and CAD remains vulnerable in an environment of elevated uncertainty, with a risk profile that tends to deliver violent—albeit short-lived—declines in periods of market volatility”, said the Scotiabank analyst team. “Domestic risk is limited ahead of Thursday’s speech from BoC SDG Wilkins, titled ‘Innovation and Inclusive Growth’. The speech may offer an update on the BoC’s economic outlook, in line with communication plans outlined by Wilkins last November.”

USD/CAD levels to consider

At time of writing, USD/CAD is trading at 1.2565, up 0.61% on the day, with next resistances seen at 1.2600/02 (psychological level/100-day SMA) and 1.2660 (Dec 28 high). On the flip side, supports could be found at 1.2483 (intraday low) and 1.2418 (20-day SMA).