The major announcement of this week so far was the Bank of Canada interest rate decision which drove the USD/CAD pair sharply higher, surging 0.8%. The greenback rose versus the G10 peers and sterling moved mixed against the major currencies as Brexit talks paused.
BoC Left Interest Rates on Hold; USD/CAD Posts an Aggressive Bullish Run
The Bank of Canada monetary policy was one of the most important announcements of this week and the Canadian dollar was the biggest mover with the worst performance. The BoC kept its interest rate decision unchanged at 1.00%, however the central bank mention that a strong job growth and rising inflation signaling that the next move could be a rate hike, but the timing of the monetary policy decision is up in the air. Also, they credited that any increase in inflation to temporary factors and said continuous cautiousness is needed on rate moves. It is worth to refer that the Canadian economy has slowed down in the second quarter of this year but it recorded a growth 1.7% in GDP for the third quarter. The BoC raised rated twice this year and wanted to make it clear that heading into 2018, they have no immediate plans for tightening.
USD/CAD – Technical Outlook
The U.S. dollar printed a sharp upward movement against the Canadian dollar during yesterday’s trading period and added almost 0.8% to its performance. The USD/CAD pair exposed more than 150 pips and challenged the 1.2805 barrier, which is ready to surpass it. The next level to have in mind is the 1.2910 resistance level which is the upper boundary of the sideways channel 1.2625 – 1.2910. The channel is holding since the end of October.
In addition, on the short-term timeframe, the price climbed above the three simple moving averages (50, 100 and 200) with strong momentum after the bounce off the 1.2652 support level. The RSI indicator is sloping to the upside and is approaching the 70 level, while the MACD oscillator entered into the positive path.
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