USD/CAD dropped like a stone from the resistance zone that we have been following on the blog recently, as the Canadian Dollar decided to rip higher.
The Canadian economy surprised the market to the upside with a 4.5% GDP growth in the second quarter. This was MUCH better than market expectations of a 3.7% increase and makes Canada the best performing economy in the G7. Though that tag does bring with it future issues for the Bank of Canada, like the fact that an interest rate hike is now an almost definite next step.
Interest rate futures markets are pricing in a 37% probability of a rate hike in September and an 86% probability in October. The question remains when, but the market is going to look to price the move in which is negative USD/CAD regardless:
USD/CAD Daily:
As you can see on the daily chart, the higher time frame support/resistance levels are being respected nicely and after bouncing at the 2016 swing low support level, price then retested resistance and was slapped straight back down on the data release.
Technicals predicting the fundamentals? Who would have thought!
Stepping down into the hourly and you can see the resistance zone that price was sitting at just as the news was released much more clear. The way price sets itself up at important technical levels before fundamental data is released still amazes me every time.
