- USD/CAD rises almost 200 pips on Thursday.
- The loonie went from being the best to the worst in one day.
- Data ahead: wholesale inflation and unemployment benefits in the US; and manufacturing sales in Canada.
The USD/CAD accelerated the move higher in the European session and climbed to 1.3141the highest level since November 2020. In less than 24 hours, the pair went from lows in a week to highs in years.
Following the BoC, US inflation follows.
On Wednesday, the Bank of Canada (BoC) surprised with an interest rate hike of 100 basis points to 2.50%. The expectation was for an increase of 75 basis points. Rabobank analysts see a final rate of 4% for the December meeting.
The BoC decision propelled the loonie (CAD) through the market and ended the day among the top performers. So far on Thursday the story is the opposite, and entering those linked to commodities is one of the ones that falls the most.
The pullback in oil prices, the correction after Wednesday’s rally, and the cautious climate in equity markets, is pushing USD/CAD higher.
Another important event on Wednesday was the US inflation data that climbed to the highest since 1981, leading to expectations of a 100-point interest rate hike for the next meeting. On Thursday, the data on wholesale inflation and requests for unemployment benefits will be published in the US. In Canada, the manufacturing sales data for May will be released.
Despite Wednesday’s pullback, Rababonk analysts explain that the trend remains bullish in USD/CAD, unless it breaks below 1.2850. They see the breakout of resistance at 1.3070 paving the way for a move to 1.32.
Technical levels
Source: Fx Street
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