USD/CAD drops to 5-day low as DXY falters post-FOMC minutes
|The USD/CAD pair dropped to its lowest level since August 5 at 1.2660 after the FOMC releases its July meeting minutes in the second half of the NA session. After the initial reaction, the pair was able to erase some of its losses and is now trading at 1.2675, losing 0.7% on the day.
According to the minutes from the July (25th & 26th) Federal Reserve’s monetary policy meeting, policymakers were concerned about the slowdown in inflation and agreed to monitor prices closely. Furthermore, several members of the Committee argued that the uncertainty over federal fiscal, trade and healthcare policies was reducing company spending and hiring plans. Regarding one more possible rate hike in 2017, some policymakers thought it would be better to wait to see signs of inflation rising towards the Fed's target rate of 2%.
Weighed by the cautious tone of the minutes, the greenback came under a renewed selling pressure, pushing the US Dollar Index to a fresh session low at 93.50, where the index is losing 0.27% on the day. Earlier in the session, U.S. President Donald Trump, via his official Twitter account, announced that he dismantled Manufacturing Council & Strategy Policy Forum, forcing the buck to give back its earnings against its major rivals.
Technical outlook
The pair could face the initial support at 1.2650 (Aug. 11 low) ahead of 1.2555 (Aug. 4 low) and 1.2500 (psychological level). On the upside, resistances could be encountered at 1.2700 (psychological level), 1.2785 (50-DMA) and 1.2940 (Jul. 12 high).
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