USD/CAD plummets below 1.28 on Poloz's hawkish comments
|- BoC's Poloz points to further tightening.
- USD/CAD loses nearly 50 pips in a matter of minutes.
- DXY loses momentum ahead of 94.
The USD/CAD pair came under a heavy selling pressure in the US afternoon after Stephen S. Poloz, the Governor of the Bank of Canada, delivered some hawkish comments on the policy outlook. The pair quickly dropped from 1.2860 to 1.2780 with the initial market reaction and was trading at 1.2790 as of writing, down 0.21% on the day.
Speaking before the Canadian Club Toronto, Poloz said that Canadian economy had made tremendous progress over the last year and was running close to its full potential. Although the current policy setting clearly remained quite stimulative, the economy would need less monetary stimulus over time, Poloz further added. Boosted by these comments, the loonie gained strength against its peers.
Meanwhile, recovering crude oil prices helped the commodity-sensitive CAD buy find more buyers in the session. After dropping toward the $56 mark the barrel of West Texas Intermediate reversed course and was last seen trading near $57, where it was up 0.5% on the day.
On the other hand, following its FOMC-inspired sharp fall, the US Dollar Index gained traction on the back of upbeat macroeconomic data releases from the United States. However, it struggled to preserve its bullish momentum and failed to retake the 94 mark. As of writing, the DXY was up 0.2% at 93.60.
Technical levels to consider
The immediate support for the pair aligns at 1.2755 (50-DMA) ahead of 1.2700 (psychological level) and 1.2620 (Dec. 5 low). On the upside, resistances could be seen at 1.2800 (psychological level), 1.2850 (200-DMA) and 1.2915 (Oct. 31 high). The RSI indicator on the daily graph recently eased below the 50 handle, suggesting that sellers are taking over the control of the price action.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.