USD/CAD hammered down to 1-week lows, below 1.30 mark post-BoC

Haresh Menghani FXStreet

• BoC raised interest rates by 25bps, as was widely anticipated.
• Hawkish outlook provides a strong boost to the Canadian Dollar.
• Bullish oil prices underpinned Loonie and added to the pressure.

The USD/CAD pair finally broke down of its daily consolidation phase and tumbled to one-week lows post-BoC announcement.

As was widely anticipated, the Bank of Canada (BoC), at the October meeting, decided to raise the policy rate by 25bps points to 1.7%, marking the third hike this year.

Although the hike was nearly fully priced in the market, the central bank's hawkish outlook in the accompanying monetary policy statement raise prospects for further interest rate hikes in the foreseeable future and prompted some aggressive long-unwinding trade.

Adding to this, a goodish pickup in crude oil prices provided an additional boost to the commodity-linked currency - Loonie and further collaborated to the pair’s intraday slump to levels below the key 1.30 psychological mark.

Meanwhile, resurgent US Dollar demand also did little to lend any support or stall the ongoing sharp fall as focus now shifts to the post-meeting press conference, where comments by BoC Governor and Senior Deputy Governor will play an important role in influencing the pair's momentum through the US trading session.

Technical levels to watch

A follow-through selling has the potential to continue dragging the pair further towards 1.2960 intermediate zone en-route the very important 200-day SMA support near the 1.2910 region. On the flip side, any attempted recovery might now confront some fresh supply near 100-day SMA, around the 1.3070 region, above which the pair seems all set to aim towards reclaiming the 1.3100 handle.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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