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USD/CAD tumbles to four-week lows near 1.3320 after BoC surprise interest-rate hike

  • Bank of Canada raises policy rate by 25 basis points to 4.75%. 
  • Loonie jumps across the board following the decision. 
  • USD/CAD approaches April and May lows. 

The USD/CAD plummets toward 1.3300 following the decision of the Bank of Canada (BoC) to raise its key interest rate, which took markets off guard. The Loonie is outperforming on the back of the BoC decision. 

The BoC raised interest rates by 25 basis points to 4.75%, against market consensus. In its statement, the central bank mentioned increasing concerns about Consumer Price Index inflation getting “stuck materially above the 2% target”.

The BoC's decision follows an unexpected rate hike from the Reserve Bank of Australia (RBA) on Tuesday and comes ahead of next week’s decisions from the Federal Reserve, the European Central Bank, and the Bank of Japan.

Before the announcement, the USD/CAD was trading around 1.3390, but it quickly dropped to 1.3319, reaching the lowest level since May 8. The bias for the pair is clearly to the downside, moving towards critical medium-term support levels. It is approaching the April and May-June lows at 1.3299 and 1.3314, respectively. The next support area is the January lows around 1.3360.

USD/CAD daily chart

USD/CAD

Overview
Today last price1.335
Today Daily Change-0.0054
Today Daily Change %-0.40
Today daily open1.3404
 
Trends
Daily SMA201.3509
Daily SMA501.3498
Daily SMA1001.3518
Daily SMA2001.3511
 
Levels
Previous Daily High1.3452
Previous Daily Low1.339
Previous Weekly High1.3651
Previous Weekly Low1.3407
Previous Monthly High1.3655
Previous Monthly Low1.3315
Daily Fibonacci 38.2%1.3414
Daily Fibonacci 61.8%1.3429
Daily Pivot Point S11.3379
Daily Pivot Point S21.3353
Daily Pivot Point S31.3316
Daily Pivot Point R11.3441
Daily Pivot Point R21.3478
Daily Pivot Point R31.3503

Author

Matías Salord

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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