Loonie falls sharply after dovish BOC and solid US data. All eyes now on Fed
The USDCAD pair surged 0.5% to new two-week high, after The Bank of Canada kept its key interest rate unchanged at 1.75% but cut global and domestic growth forecast as the economy was hit by trade conflicts.
The greenback received additional boost from solid US data, as private sector jobs data showed better than expected results in Oct (125K vs 120K f/c) with previous month’s figure being revised lower (93K from 135K).
Also, US GDP surprised at the upside (Q3 1.9% vs 1.6% f/c and 2.0% in Q2) generating positive signal on significantly lower than expected slowdown in US economy.
Fresh advance which comes as extension of Tuesday’s rally, cracked pivotal resistance at 1.3158 (Fibo 38.2% of 1.3345/1.3041) and generated initial reversal signal, of larger 1.3345/1.3041 fall.
Sustained break here would spark further upside, but caution is required as studies of lower timeframes are overbought and profit-taking cannot be ruled out.
Another important factor is today’s Fed decision as the central bank is widely expected to cut rates, which could hurt the greenback if chief Powell’s tone at the press conference will be dovish.
No significant support is seen until 1.31 zone (broken daily Tenkan-sen) and return and close below here would turn near-term bias bearish..
Res: 1.3164; 1.3182; 1.3193; 1.3204
Sup: 1.3145; 1.3100; 1.3074; 1.3041