USD/CAD pierces above 1.27 post-BoC statement

The USD/CAD pair, which moved in a confined range below the 1.27 handle for the majority of the day, gained traction in the last minutes after the Bank of Canada released its monetary policy statement. The pair gained nearly 100-pips and was last seen trading at 1.2761, up 0.6% on the day.

BoC hesitant over further rate hikes

Although the Bank of Canada announced that it kept its overnight target rate on hold at 1%, the monetary policy statement showed that the bank would adopt a cautious stance regarding possible rate hikes in the future. "While higher interest rates will likely be required over time, Governing Council will continue to be cautious, guided by incoming data in assessing the economy’s sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation," the statement read.

In the meantime, boosted by the upbeat ADP employment report, which ramped up the expectations of a robust NFP reading on Friday, the US Dollar Index advanced to its highest level since November 22 at 93.56. As of writing, the index was at 93.50, up 0.25% on the day.

On the other hand, the commodity-linked loonie is having a difficult time amid falling crude oil prices. Following yesterday's modest recovery, the barrel of West Texas Intermediate came under pressure once again on Wednesday and broke below the $57 handle on its way to a new 2-week low at $56.55. 

Technical outlook

The pair could encounter the first technical resistance at 1.2835 (Nov. 11 high) ahead of 1.2880 (200-DMA) and 1.2940 (Jul. 12 high). On the downside, supports could be seen at 1.2750 (20-DMA), 1.2700 (psychological level/50-DMA) and 1.2625 (Dec. 5 low).