USD/CAD strengthens on upbeat Canadian data

USD/CAD gave back the advance from earlier this week as Canada added a staggering 79.5K jobs in November, with the 3Q Gross Domestic Product (GDP) report beating market expectations, and the pair may exhibit a more bearish behavior over the near-term should the Bank of Canada (BoC) show a greater willingness to further normalize monetary policy in 2018.

Even though the BoC is largely anticipated to retain the current policy at its last 2017 interest rate decision on December 6, the central bank may strike a more hawkish tone as the ongoing improvement in the labor market pushes the Unemployment Rate down to an annualized 5.9%, the lowest reading since 2008. In turn, Governor Stephen Poloz and Co. may prepare Canadian households and businesses for higher borrowing-costs as ‘less monetary policy stimulus will likely be required over time.

With that said, USD/CAD may threaten the range-bound price action carried over from November as it marks another failed attempt to test the key former-support zone around 1.2980 (61.8% retracement) to 1.3030 (50% expansion), with the pair facing a growing risk of giving back the rebound from the 2017-low (1.2061) as a bear-flag appears to be taking shape.