USD/CAD jumps to 4-day high
- The CAD under pressure due to BOC's cautious outlook.
- Weakness in oil prices could hurt CAD.
The USD/CAD pair was last seen trading at a 4-day high of 1.2813, courtesy of the Bank of Canada's (BOC) cautious outlook.
The fact that the BOC chose to overlook all of the recent data improvements seems to have hurt the CAD. Kathy Lien from BK Asset Management says, "the central bank attributed any rise in inflation to temporary factors and said continued cautiousness is needed on rate moves. Having raised interest rates twice this year, the Bank of Canada wanted to make it clear that heading into the New Year, they have no immediate plans for tightening."
Also, the decline in oil prices to 2-1/2 week low is keeping the CAD under pressure. The focus today is on the Canadian data docket. Lien adds, "today's IVEY PMI report will be softer and USD/CAD will trade higher."
USD/CAD Technical Levels
A break above 1.2837 (Nov. 21 high) would open up upside towards 1.2909 (Nov. 30 high). A violation there would expose 1.2956 (200-day MA). On the lower side, breach of support at 1.2769 (10-day MA) could yield a pullback to 1.2680 (50-day MA) and 1.2624 (Nov. 5 low).