​Technical Analysis 2017.08.1 - USD/CAD

Canada’s Central Bank decision to enact a tighter monetary policy cost the USD/CAD pair 10% or 900 points.
The bank also raised the interest rate by 0.25% roughly two weeks ago. Simultaneously USD reached a 15-month record low.

CAD has a tight correlation with oil thus the increase the commodity experienced recently extended to the currency also. Canada’s GDP data, which was released on the 31st of July, which surpassed expectations three-fold also bolstered CAD. But that was the extent of good news, as both the Raw Material Price Index and Industrial Product Price failed to even meet expectations. The Raw Material Price Index in fact dropped to a 1.5-year low, and the Industrial Product Price dropped even more significantly hitting a 2-year low, at which point the currencies went into a correction. Canada’s economy is heavily dependent on raw materials exports, An increase of the CAD might actually hurt exports as products would essentially cost more in other currencies.
Canada’s Trade Balance and employment market data is due to be announced on Friday. The Markit Manufacturing PMI is Canada’s due to be announced at 15:30 GMT+2. The U.S. will be also releasing currency affecting news including its own Markit at 16.00 GMT+2 and Person Income and Spending at 14.20 GMT +2 – the Markit is expected to yield a 1.3 point loss . The API Weekly Crude Oil Stock is also a noteworthy event.

Support and resistance
Support levels USD/CAD: 1.2400, 1.2300, 1.2175.
Resistance levels USD/CAD: 1.2650, 1.2570, 1.2470.

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