USD/CAD surges to mid-1.3400s, highest since June 2017
| • Bearish BoC policy statement continues to weigh on the CAD.
• A slump in crude oil prices further dent sentiment around Loonie.
• Focus remains on OPEC meeting outcome/BoC Poloz’s speech.
The USD/CAD pair extended its recent upsurge for the third consecutive session and is currently placed at 17-month tops, just below mid-1.3400s.
A combination of negative factors kept exerting some heavy downward pressure on the Canadian Dollar and assisted the pair to build on this week's strong up-move from the 1.3160 region.
Against the backdrop of overnight bearish BoC monetary policy statement, hinting at downward revisions to its growth and inflation forecasts, a sharp fall in crude oil prices further dented sentiment surrounding the commodity-linked currency - Loonie.
Adding to this, a fresh wave of global risk-aversion trade, triggered by reviving fears of a further escalation in tensions between the US and China boosted the US Dollar's relative safe-haven status and provided an additional boost.
Investors turned sceptic over the recent progress made in trade relations between the world’s two largest economies following the arrest of a leading Chinese executive in Canada, who is now set to be extradited to the US to face charges of violating Iran sanctions.
Meanwhile, possibilities of some short-term trading stops being triggered on a sustained breakthrough the 1.3400 handle could also be one of the factors behind the pair’s latest leg of a sudden spike since the early European trading session.
Moving ahead, today's economic docket, featuring the release of Canadian trade balance data, along with the ADP report and ISM non-manufacturing PMI from the US, will now be looked upon to grab some short-term trading opportunities.
The key focus, however, will be on the outcome of the closely watched OPEC meeting, and a subsequent presser at 1200 GMT, followed by a scheduled speech by the BoC Governor Stephen Poloz, later during the early North-American session.
Technical levels to watch
A follow-through buying has the potential to continue lifting the pair further towards the 1.3480 intermediate resistance en-route the key 1.3500 psychological mark. On the flip side, the 1.3400 handle now seems to protect the immediate downside and is followed by previous strong resistance, now turned support near the 1.3360-50 region.
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