- USD/CAD stages a solid intraday recovery from sub-1.4000 levels, or 1-1/2 week lows.
- Sliding oil prices, a goodish pickup in the USD demand led to the initial leg of recovery.
- The BoC’s surprise decision to cut interest rates to 0.25% provided an additional boost.
The USD/CAD pair built on its goodish intraday recovery move from 1-1/2 week lows and spiked to fresh session tops, around mid-141.00s in the last hour.
The latest leg of a sudden pick up over the past hour or so followed the Bank of Canada’s (BoC) surprise decision to lower policy rates by 50bps to 0.25% from 0.75%. The Canadian central bank also launched a Commercial Paper Purchase Program and committed to buying a minimum of C$5 billion in government securities per week.
This comes on the back of the ongoing slump in crude oil prices and exerted some heavy downward pressure on the Canadian dollar. Adding to this, the US dollar gained some follow-through traction during the early North-American session, which remained supportive of the pair’s strong intraday rally of over 160 pips from sub-1.4000 levels.
The pair has now recovered a major part of the previous day’s negative move, though it remains to be seen if bulls are able to capitalize on the momentum amid concerns over the rapid spread of the coronavirus in the United States.
Technical levels to watch