USD/CAD consolidates overnight BoC-led strong gains

   •  Oscillated in a range around 1.28 handle, highest since July
   •  Retracing US bond yields failing to extend support

The USD/CAD pair oscillated in a narrow trading range and was seen consolidating overnight BoC-led strong gains to its highest level since July 12.

The pair rallied hard on Wednesday and surged through the 1.2800 handle following perceived dovish BoC announcement. The central bank left interest rates unchanged and said it will be cautious while making further interest rate adjustments, given uncertainties facing the economy.

   •  USD/CAD: continuing to be driven by rates - Nomura

The BoC revised up its forecasts for GDP and noted that there is still slack remaining in the labor market, which should support growth without additional inflationary pressure. Further, the central bank expected export growth to be slower because of the recent appreciation of the Canadian dollar.

With investors looking past the BoC decision, a mildly softer tone around crude oil prices weighed a bit on the commodity-linked currency - Loonie and helped offset the US Dollar weakness. Meanwhile, a modest retracement in the US Treasury bond yields also did little to provide any fresh bullish impetus and has eventually led to the pair's lackluster trading action through early European session on Thursday.

Today's US economic docket features the release of weekly jobless claims, goods trade balance, prelim wholesale inventories and pending home sales, which would be looked upon for some short-term trading impetus. 

Technical levels to watch

A strong follow-through buying interest beyond the 1.2800 handle has the potential to continue lifting the pair towards 1.2865-70 horizontal resistance en-route the 1.2900 round figure mark. 

On the downside, 1.2770-65 area now seems to act as immediate support, which if broken could trigger a corrective slide back towards the 1.2700 handle ahead of 1.2680 support.