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USD/CAD hit fresh highs above 1.2800 on Poloz

  • CAD weakened after the release of the Bank of Canada’s Financial System Review. 
  • Poloz: too soon to have a reading in recent rate hikes. 
  • Powell: Case for December rate hike is coming together

The USD/CAD pair printed a fresh daily high during the American session at  1.2824, the highest level in a week. It is rising for the second day in a row. From yesterday’s low, it gained 140 pips. 

While the US dollar remains strong in the market, particularly against European currencies, the Loonie weakened following the release of the Financial System Review from the Bank of Canada. The report contained no surprises but market expectations regarding a BoC rate hike in March are elevated. 

BoC Governor Poloz mentioned that is premature to have a reading on the impact on interest rates hike and that it takes 6 to 8 quarters for the full effects to work its way through the economy. He did not appear to deliver a hawkish message and the loonie lost momentum. 

In the US, Jerome Powell is testifying at the Senate Banking Committee on his nomination as Fed’s chair. So far, he repeated Yellen’s stance and pointed to a December rate hike. 

Poloz Speech: More employment growth will add to sustainability of existing debt
Fed’s Powell: Recent weak inflation readings are ‘surprising’

Levels to watch 

USD/CAD rose back above 1.2800 and climbed to a fresh high. At the moment of writing is trading above 1.2800, still close to last week highs that lie at 1.2835. Above that level resistance, could be seen at 1.2860 (Oct 30 high) and 1.2895. On the downside, the FXStreet's technical confluence indicator identifies immediate support at 1.2790 and a strong area around 1.2740 and then 1.2720. 

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