USD/CAD deflates from 1.3200, trading flat near 1.3180

The greenback is trading almost unchanged vs. its Canadian peer on Wednesday, taking USD/CAD back to the 1.3180 region after reaching highs above 1.3200 on Tuesday.

USD/CAD gains capped above 1.3200

The upside momentum around the buck seems to have run out of steam so far today, prompting the pair to ease from yesterday’s tops in the 1.3200/10 band and looking to stabilize in the 1.3180 region.

Extra selling pressure in crude oil prices has weighted on CAD on Tuesday after the API reported its second largest increase in supplies in US history, climbing to nearly 14.3 million barrels during last week and motivating the barrel of West Texas Intermediate to drop to fresh lows in the $51.20 area.

Additionally, yield spreads between the US and Canadian money markets keep favouring the buck and it should tend to widen in light of the increasing divergence in monetary policy between the BoC and the Fed.

On the data front, Housing Starts is only due in Canada, while the weekly report on crude oil inventories by the EIA is expected in the US docket.

USD/CAD significant levels

As of writing the pair is losing 0.06% at 1.3178 facing the next support at 1.3171 (low Feb.8) seconded by 1.3139 (200-day sma) and then 1.3072 (low Feb.7). On the other hand, a breakout of 1.3215 (high Feb.7) would aim for 1.3275 (55-day sma) and finally 1.3311 (38.2% Fibo of the 2016 drop).