USD/CAD hits fresh seven-month lows near 1.3100 after Powell and Macklem
- US dollar losses strength while the loonie gains momentum after a spike in volatility.
- USD/CAD about to post the lowest close since mid-January.
The USD/CAD pair found resistance at 1.3160 and dropped to 1.3101, reaching the lowest level in seven months. So far it has been able to hold above 1.3100, but under the relevant technical level of 1.3140. It is trading at 1.3120, down 25 pips for the day.
The loonie gained momentum despite the recovery of the US dollar following the new framework announced by the Federal Reserve. The central bank adopted an average inflation target. Powell ward that inflation overshoot will be moderate.
Bank of Canada Governor Macklem also spoke at the Jackson Hole symposium. He mentioned that many central banks are at the lower bound on rates. He said they see a disconnection between their perception of inflation and the public’s.
Risk appetite also weighed on USD/CAD. After Powell’s presentation, Wall Street rose further. The Dow Jones is off the highs but up 0.33% and the S&P 500 gains 0.05%. Over the last hours, shares trimmed gains, helping the dollar.
Technical levels