The sharp reaction of the USDCAD to the weak data is related to market expectations on the coming BOC monetary meeting. There was some confidence in looming rate hike among the investors. And positive economic reports could only support the expectations.
The weaker numbers ease pressure on the regulator to bring up a hawkish stance at Wednesday's meeting. Part of the market still expects the hike, that’s why we perceive the current spike of USDCAD as an attractive opportunity to enter the market with a sell order. Most probably investors will be busy pricing in the looming tightening up till next Wednesday, thus the slide to recent lows is not ruled out.
The nearest target on the way lower for USDCAD is 1.3050 with 1.2980 to follow.