USD/CAD heads for biggest gain in a month after BoC
- CAD among the worst performers of the US session.
- Weakens continued even after BoC statement.
- Crude oil down more than 2%.
The USD/CAD pair continued to rise during the American session and extended the post-Bank of Canada (BoC) decision rally. It just reached 1.2807, a fresh 5-day high. Price remains near the top, slightly below 1.2800.
CAD hit by BoC and crude oil
The Bank of Canada left, as expected, the benchmark interest rate at 1%. It repeated it will be cautious regarding futures moves. It is the second time in-a-row it keeps rates unchanged after rising it in July and September.
The central bank also signaled again that rates will eventually need to rise and continued to mention the slack in the labor market, despite the strong numbers of Friday’s reports. BoC did not mention the Canadian dollar in the statement.
The loonie drooped sharply after the statement and it continued falling afterward. It was also hit by a slide in crude oil prices and a stronger US dollar. The WTI barrel was losing more than 2% and recently reached $56.10 the lowest in two weeks.
The greenback gained momentum after the release of the ADP employment report . It showed that US private sector employment rose by 190K in November, pointing to a solid labor market. The DXY hit 93.57, the highest since November 22. It was hovering around 93.50 at the 20-day moving average.
Today’s rally pushed USD/CAD far from the 1.2650 relevant area and removed the bearish momentum. To the upside, above 1.2800 resistance levels might be seen at 1.2815 (Oct 25 high) and 1.2850 (Nov 30 low). On the flip side, FXStreet's technical confluence indicator identifies support at 1.2685 and 1.2645 before the strong 1.2595/1.2600 barrier.