USD/CAD hits a one-month low under 1.3500, loonie recovers from the dovish BoC hike

Bank of Canada delivered a rate hike below expectations on Wednesday.
Loonie resurges after yesterday’s slide.
USD/CAD testing critical support around 1.3500.

Matías Salord FXStreet

The USD/CAD dropped more than a hundred pips from the daily high at 1.3625 and currently is testing the critical support area around 1.3500. The loonie is among the top performers on Thursday. It bottomed at 1.3489, the lowest level since October 23.

A firm break under 1.3500 would leave USD/CAD vulnerable to an extension of the downside, with not much support area until 1.3400. If the pair remains above, the dollar could recover ground but only above 1.3640/50 if the outlook improves for the greenback.

After BoC, focus on data

On Wednesday, the Bank of Canada raised the key interest rate by 50 bps, surprising market participants that expected 75 bps. The loonie lost ground across the board after the dovish rate hike. On Thursday, however, it is recovering supported by risk appetite and higher crude oil prices. On Friday, the August Canadian GDP report is due.

In the US, ahead of the FOMC decision on November 2, GDP data released on Thursday showed the economy expanded at an annualized rate of 2.6% during the third quarter, above the 2.4% market consensus, while the GDP Price Index dropped from 9.1% to 4.1%. A different report showed Durable Goods Orders increased by 0.4% in September according to preliminary data. Initial Jobless Claims rose to 217K while Continuing Claims jumped to 1.438M, the highest in months.

The greenback lost momentum after the numbers and trimmed gains across the board. The DXY is up by 0.55%, recovering just half of Wednesday’s losses. The move higher looks vulnerable as US yields are at fresh weekly lows and equity prices rise.

Technical levels

USD/CAD

Overview
Today last price	1.3499
Today Daily Change	-0.0053
Today Daily Change %	-0.39
Today daily open	1.3552

Trends
Daily SMA20	1.3714
Daily SMA50	1.3405
Daily SMA100	1.3154
Daily SMA200	1.2927

Levels
Previous Daily High	1.3652
Previous Daily Low	1.3508
Previous Weekly High	1.3885
Previous Weekly Low	1.363
Previous Monthly High	1.3838
Previous Monthly Low	1.2954
Daily Fibonacci 38.2%	1.3563
Daily Fibonacci 61.8%	1.3597
Daily Pivot Point S1	1.3489
Daily Pivot Point S2	1.3426
Daily Pivot Point S3	1.3345
Daily Pivot Point R1	1.3633
Daily Pivot Point R2	1.3714
Daily Pivot Point R3	1.3777

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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