USD/CAD leaps to 1.2180 on US tax rumours

A bout of buying interest around the greenback has propelled USD/CAD to the area of 1.2180, close to daily highs.

USD/CAD up on tax reform chatter

USD has reacted positively to increasing market chatter regarding the likeliness that the Trump administration could make any announcement regarding its tax reform plans, although there has been no confirmation so far.

Yields in the US money markets have been boosted on the rumour, lifting the key 10-year reference to the vicinity of the 2.18% level, or daily highs, and at the same time widening the differential with its Canadian peer.

In the meantime, the pair is extending its consolidative theme and is looking to stabilize following last week’s fresh cycle lows near 1.2050, always with US and Canadian yields as the main drivers of the price action as well as the futures steps of the Bank of Canada.

USD/CAD significant levels

As of writing the pair is retreating 0.09% at 1.2175 facing the next support at 1.2080 (low Sep.12) seconded by 1.2059 (2017 low Sep.8) and then 1.1916 (low May 14 2015). On the upside, a break above 1.2263 (10-day sma) would expose 1.2420 (21-day sma) and finally 1.2469 (23.6% Fibo of the 2017 drop).