- The Canadian dollar outperforms others on the aggressive tone of the Bank of Canada.
- US dollar under pressure across the board, DXY down 0.60%.
- USD/CAD is headed for the fourth consecutive weekly decline.
After taking a break from the Bank of Canada’s rate hike on Wednesday, the USD/CAD resumed the decline on Thursday and broke below 1.2600, to the lowest level in six weeks.
The pair bottomed at 1.2581 and is hovering around 1.2590, maintaining significant weekly losses. The loonie is headed for the fourth consecutive weekly gain and has turned positive for the current year.
The decline is being driven by the weakening of the US dollar on Thursday. DXY falls 0.60%. Stock markets are mixed, while US yields are flat. US economic data was mixed, with the ADP employment report reading lower than expected ahead of tomorrow’s NFP.
The loonie was also helped by hawkish comments from Bank of Canada deputy governor Paul Beaudry. On Thursday he said the BoC sees it as increasingly likely that it will have to raise its official interest rate to 3% or more.
USD/CAD looks oversold, but no signs of correction or consolidation are in sight at the moment. The next support level could be at 1.2570, followed by the 1.2535 area. To the upside, resistance levels lie at 1.2630 and 1.2670. The dollar needs to rally and hold above 1.2685 to relieve negative pressure.
Technical levels
Source: Fx Street
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