USD/CAD hangs near 2-1/2 week lows ahead of yet another data heavy calendar

   •  CAD underpinned by Thursday’s solid economic reports.
   •  A modest pickup in the USD demand helps hold above 1.27 handle. 
   •  Today’s important macro releases eyed for fresh impetus. 

The USD/CAD pair remained under some selling pressure for the third consecutive session on Friday and remained within striking distance of the 1.2700 handle, tested yesterday.

The pair extended this week's rejection slide from levels beyond the 1.2900 and came under some intense selling pressure on Thursday following a duo of solid Canadian economic reports. Canadian retail sales crushed expectations and recorded a strong growth of 1.5%, while headline CPI rose above the Bank of Canada's (BOC) target, at 2.1% y/y for November. 

The upbeat releases might now allow the BOC to continue with its tightening strategy and deliver another rate hike in January, which was eventually seen underpinning the Canadian Dollar through the early European session on Friday. 

Meanwhile, the market seems to have largely ignored a modest uptick in the US Dollar demand, albeit might continue to help the pair to hold its neck above the 1.2700 handle ahead of a yet another busy day in terms of economic releases. 

Today's economic docket features the release of monthly Canadian GDP growth figures and from the US - personal income/spending figures for November, along with the Fed's preferred inflation gauge - core PCE price index, Durable Goods Orders, New Home Sales and the Michigan consumer sentiment index, are due for release later during the early NA session.

Technical levels to watch

Bears would be eyeing for a decisive break through the 1.2700 handle, below which the pair is likely to accelerate the fall towards 100-day SMA near the 1.2600 mark with some intermediate support near 1.2670-60 area.

On the upside, any meaningful recovery attempt is likely to confront fresh supply near mid-1.2700s, which if cleared might trigger a short-covering bounce towards the 1.2800 handle en-route 1.2850-55 supply zone.