- The USD / CAD has struggled to take advantage of its intraday recovery movement for lows of several months.
- The sale in USD remained intact despite better US macroeconomic data and capped the increase.
- The BoC left its key rates unchanged and reduced certain market operations.
- A sustained break below 200 SMA days necessary before positioning yourself for any other slide.
USD / CAD fell around 75 pips and rebounded closer to several month lows in an unstable reaction to the BoC’s announcement.
A sharp intraday drop of around 5% in crude oil prices undermined the commodity currency – the loonie – and helped the pair achieve a satisfactory intraday rebound from the lowest level since early March. The rally, however, was not followed, instead it was sold near the 1.3570 region amid widespread weakness in the US dollar.
The USD could not get a break after Wednesday’s ADP report, which showed that private sector employment in the United States fell less than expected, by 2.76 million in May. In addition, the US non-manufacturing PMI ISM stood at 45.4 for May, compared to 44.0 expected, although again it did not impress USD bulls.
Meanwhile, the last step in a sudden drop at the start of the North American session came after the Bank of Canada (BoC) left its benchmark interest rates at 0.25% at the end of the June policy meeting. However, the fact that the BoC reduced certain operations in the market in a context of improving financial conditions gave a good recovery to the Canadian dollar.
Despite the sharp fall, the pair again showed some resilience below the key psychological mark of 1.3500 and a quick recovery around 30 pips. It is therefore prudent to wait for a sustained break below the support of 1.3460 (200-DMA) before traders start to position themselves for an extension of the pair’s recent bearish trajectory.