USD/CAD jumps to 1.3140 as the loonie tumbles after BoC
- Canadian dollar tumbles after Bank of Canada meeting.
- Sharply decline in crude oil prices also weights on the loonie, WTI down 2.55%.
The USD/CAD pair rose sharply from 1.3050 to 1.3139, reaching the highest level since December 26. As of writing, it trades at the top, holding the bullish tone intact.
The statement from the Bank of Canada triggered the negative rally of the loonie. The central bank, as expected, kept it key interest rate unchanged at 1.75%. However, in the statement, it removed the reference to rates being “appropriate”. Regarding growth, the BoC mentioned the latest data shows it will be weaker in the near term.
Overall, the BoC was seen as more dovish than market expectations. Now attention turns to the press conference that will start at 16:15 GMT.
It's worth mentioning the decline in crude oil prices. Over the last two hours, the WTI barrel lost more than one dollar, falling to $56.67 the weakest level since early December.
Breaking the range
Also technical factors might contribute to the rally of USD/CAD. Since January 10 the pair has been moving in a range between 1.3040 and 1.3080. It traded outside the band, but it always pulled back. A consolidation on top of 1.3080 would be a positive technical development. The next resistance level is seen at 1.3155 followed by 1.3180 (100-day moving average).