USD/CAD inter-markets: further gains likely near-term

The greenback has started the week on a strong note, extending the upside momentum from last week and especially following the victory of Donald Trump in the US elections.

Spot has quickly advanced to the vicinity of the 1.3600 handle during early trade, although the bullish attempt seemed to have run out of steam soon afterwards, retreating the mid-1.3500s.

Declining crude oil prices, Trump’s potential boost to fiscal policy and expectations of a rate hike by the Fed in December remain all underpinning the up move in the buck, which clinched YTD tops just above the psychological 100.00 limestone early in the European morning.

CME Group’s FedWatch tool now sees the probability of a Fed’s move next month at just above 81%, while yields in the US money markets are trading in multi-month tops across the curve.

Most commodities, particularly crude oil and Gold, are suffering the dollar’s strength, keeping at the same time CAD under heavy pressure.

Technically, there is not much in terms of resistance levels until the 61.8% Fibo retracement of the 2016 drop at 1.3839, ahead of the 76.4% retracement at 1.4165. Furthermore, the pair’s outlook should allow for further gains while above the near-term support line, currently at 1.3334.