USD/CAD clings to modest gains around 1.2850 ahead of high-tier data

• USD/CAD is pushing higher for the third straight day on Friday.
• Dismal market mood is helping USD gather strength.
• Eyes on key macroeconomic data releases from US and Canada.

The USD/CAD pair rose to a fresh multi-week high of 1.2882 on Thursday but erased a large portion of its daily upside amid renewed USD weakness in the second half of the day. On Friday, the pair is trading in a relatively tight range ahead of key macroeconomic data releases and was last seen gaining 0.13% on the day at 1.2845.

DXY edges higher following Thursday’s pullback

Market participants remain focused on the chaos surrounding Wall Street after several brokerage firms decided to restrict trading in highly volatile GameStop and AMC stocks and received a huge backlash. Although the inial market reaction to this development allowed risk flows to take control of financial markets on Thursday, the market mood seems to have soured with the S&P 500 Futures losing more than 1%. Meanwhile, the US Dollar Index (DXY) is currently up 0.22% at 90.65.

Later in the session, Statistics Canada will release the Gross Domestic Product (GDP) data for November, which is expected to remain steady at +0.4%. Additionally, the US Bureau of Economic Analysis will publish the Personal Income and Personal Spending figures alongside the Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge.

More importantly, investors will keep a close eye major US equity indexes’ performance and further risk aversion could provide a boost to the DXY in the second half of the day. 

Meanwhile, the barrel of West Texas Intermediate is rising nearly 1% on Friday, helping the commodity-sensitive CAD limit its losses against the buck for the time being. 

Technical levels to watch for