- Loonie’s rally eases but still remains the top performer boosted by hawkish Bank of Canada.
- USD/CAD posts worst daily loss since late-September.
The USD/CAD tumbled after the decision and the statement of the Bank of Canada that triggered a rally of the loonie across the board. After losing more than a hundred pips, the pair rebounded modestly from the lows, trimming some of the post-BoC gains.
The sharp slide took place after the rate hike from the Canadian central bank. The tone of the statement boosted the loonie and sent USD/CAD to 1.2967, the lowest in a week. From the lows, bounced to the upside, rising to 1.3020. As of writing was trading at 1.3005/10, down 70 pips from yesterday’s close and still holding a strong bearish tone.
“The Bank of Canada’s statement was more hawkish than the one it published last September. The central bank not only raised interest rates (which was expected by markets), but it also dropped its reference to “gradual” rate hikes. That could mean a more aggressive path to monetary tightening than what was expected previously”, said analyst from National Bank of Canada.
The move higher from the bottom took place amid an extension of US dollar gains across the board, particularly against commodity and emerging market currencies amid risk aversion.
USD/CAD Technical levels
To the downside, a key level is seen at 1.2985 (20 and 33 moving average in the daily chart): a close below that level could signal more losses ahead. Below the next strong support might be seen at 1.2910 (Oct 16 low) and 1.2885. On the flip side, the immediate resistance lies at 1.3020 (recent intraday high), 1.3065/70 and 1.3100.
Share
