“¢ Comments by BoC’s Poloz indicated an upcoming rate hike in October.
“¢ Subdued USD demand/bullish oil prices exert some additional pressure.
“¢ Canadian GDP print/second-tier US economic data eyed for fresh impetus.
The USD/CAD pair extended overnight retracement slide from over two-week tops and traded with a negative bias through the mid-European session.
Currently trading around the 1.3015 region, just a few pips off session lows touched in the last hour, the pair has now erased all of its gains recovered in the previous session. Against the backdrop of a subdued US Dollar price action, a combination of factors underpinned the Canadian Dollar and exerted some fresh downward pressure on Friday.
Speaking at the Atlantic Provinces Economic Council dinner, the BoC Governor Poloz indicated that the central bank is set to raise interest rates in October despite the prevalent uncertainties surrounding the North American Free Trade Agreement (NAFTA).
Adding to this, the recent bullish run in crude oil prices continued underpinning the commodity-linked currency Loonie and further collaborated to the pair’s weaker tone on the last trading day of the week.
Moreover, investors also seemed inclined to lighten their bullish positions ahead of today’s important release of the monthly Canadian GDP growth figures. This coupled with second-tier US economic data should produce some meaningful trading opportunities during the early North-American session.
Technical levels to watch
Immediate resistance is now pegged near the 1.3030 region and is closely followed by mid-1.3000s, above which the pair is likely to dart towards reclaiming the 1.3100 handle. On the flip side, a follow-through weakness below the key 1.30 psychological mark is likely to accelerate the fall towards 1.2975-70 horizontal support en-route the 1.2955-50 region.
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