USD/CAD tumbles toward 1.2300 after BoC decision

• Bank of Canada decision to end QE boosts CAD across the board.
• USD/CAD drops toward 1.2300, falling more than a hundred pips from highs. 

The USD/CAD dropped sharply following the announcement of the Bank of Canada (BoC) to end QE. The loonie soared across the board becoming the best performer. Versus the dollar is climbed to the highest in three days.

BoC’s decision to keep interest rates unchanged as expected. Market consensus was looking at a reduction in QE to around CAD1 billion per week from 2B, instead, the central bank decided to end purchases. In a few minutes, BoC Governor Macklem will host a press conference.

The larger than expected tightening from the BoC triggered also a rebound in US yields.

The USD/CAD dropped from 1.2410 to 1.2312 after the statement reached the lowest level since Thursday. The pair remains near the lows. A break under 1.2320 (Oct 22 low) will clear the way for a test of 1.2300. Earlier on Wednesday, USD/CAD traded at 1.2430, the highest level in two weeks.

Technical levels