USD/CAD: bulls looking for a daily close above bearish wedge resistance

• USD/CAD flips over with the greenback on the attack.
• 1.3124 is now up for grabs on closes outside of the bearish wedge's resistance.

USD/CAD is back up to the top of the bearish wedge and at the highest levels since 19th March having scored a high of 1.3082. Currently, USD/CAD is trading at 1.3070, up from a low of 1.2949 (attempt to fill the ‘G7 gap’ at 1.2925 that had been observed between Friday’s close and Monday’s Asian open failed).

There are no domestic releases ahead of Friday’s manufacturing sales data, but headline risks are elevated as Foreign Affairs Minister Chrystia Freeland and US Trade Representative Robert Lighthizer are scheduled to meet today n Washington.

Headline risks

Freeland spoke to the media in Washington today ahead of the meeting to discuss a NAFTA road-map with Lighthizer.  She said she had a good conversation on Friday and Sunday and that they will continue with negotiations. She added that NAFTA exists and that today they will be meeting to discuss how to modernise it.  

While the FOMC was slightly more hawkish than expected, domestic rate expectations for the loonie have also recovered and OIS are once again pricing two full 25bpt Bank of Canada hikes by December, as analysts at Scotiabank explained,  "Our USD/CAD FV estimate is currently around 1.2680."

USD/CAD levels

Resistance had been observed around levels roughly corresponding to the descending trend line drawn from the 2016-2017 highs around 1.3040. However, this level has been breached and 1.3124 is now up for grabs on closes outside of the bearish wedge's resistance. On the downside, The 1.2950-1.2925 gap is key and a break there opens a target of 1.2850.