- The pair moves lower after BoC hiked rates by 25 bp.
- Spot quickly broke below the 1.3100 handle following the BoC decision.
- BoC raised the key rate to 1.50%, matching prior surveys.
The Canadian Dollar is sharply appreciating vs. its American neighbor on Wednesday, dragging USD/CAD to fresh lows in sub-1.3100 levels.
USD/CAD lower on hawkish BoC
Spot quickly dropped to fresh 2-day lows after the Bank of Canada raised the key rate by 25 bp to 1.50%, as largely anticipated by market participants.
The BoC sees modest effects of tariffs on economic growth and prices, while it will monitor the response from companies and consumer to trade actions.
The central bank also said that higher rates are warranted in order to keep inflation close to the bank’s goal. The BoC should continue the gradual approach amidst a data-dependent stance.
USD/CAD significant levels
As of writing the pair is losing 0.20% at 1.3088 facing the next support at .3064 (low Jul.9) seconded by 1.3005 (55-day sma) and then 1.2927 (50% Fibo of the 2017 drop). On the other hand, a break above 1.3174 (high Jul.11) would open the door to 1.3193 (21-day sma) and finally 1.3226 (high Jul.3).
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