USD/CAD soars and breaks above 1.3250 amid risk aversion
|- USD/CAD rises almost a hundred pips from yesterday’s low, points to a reversal and to close the bearish gap.
- Key event ahead: Bank of Canada decision.
The USD/CAD pair has risen almost a hundred pips from the daily low, making a significant reversal. The loonie is among the weakest currencies, ahead of tomorrow Bank of Canada decision.
Concerns from the US bond market about the economic outlook in the US, about how far, can the current economic cycle run, is pushing equity prices sharply lower and boosting the demand for the yen and the US dollar. The Loonie is among the most affected currencies.
Earlier today the USD/CAD tested weekly lows near 1.3160 but then turned to the upside and initially rose back above 1.3200. During the last hours broke above 1.3220 and jumped to 1.3257 hitting a fresh daily high. Price remains near the top and appears to be headed to fill the bearish gap that followed Monday’s opening at 1.3235 after having closed on Friday near 1.3300.
The greenback is up as the US yield curve continues to flatten while equity prices in the US tumble. The Dow Jones drops more than 700 points or 2.70%. The slide in equity prices and a lower 10-year yield (2.89%, lowest since September) favored a rally of the yen.
On Wednesday, the Bank of Canada will announce its decision on monetary policy. No change in rates is expected and will likely stay unchanged at 1.75%. BoC rose rates in October, and some analysts see more rate hikes in 2019. The ongoing situation with volatility across financial markets, the decline crude oil prices and recent speculation about the Federal Reserva policy stance, could change expectations for BoC for next year.
USD/CAD Levels to watch
Resistance levels could be located at 1.3265 (Nov 13 and 14 high), 1.3290 and 1.3325. On the flip side, now 1.3220 has become the immediate support followed by 1.3200 and the weekly low at 1.3155/60.
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.