USD/CAD jumps above 1.32 after Fed’s hawkish surprise

The bid tone around the US dollar strengthened, pushing the USD/CAD pair to a session high of 1.3245 after Fed hiked rates as expected, but surprised with the hawkish ‘dot plot’ chart.

The central bank now anticipates 3 rate hikes in 2017 as opposed to the forecast of 2 rate hikes expected by markets.

The USD/CAD was already trading on the front foot, courtesy of a nice rebound from the support of the rising trend line coming from the May low and Aug low.

The 2-year treasury yield, which mimics short-term rate hike expectations, jumped five basis points, thus making the US dollar attractive.

USD/CAD Technical Levels

The spot was last seen trading around 1.3245. A break above 1.3264 (Nov 9 low) would open the door to 1.33 (zero figure) and then 1.3357 (Dec 5 high). On the other hand, a breakdown of support at 1.32 (zero figure) could yield a sell-off to 1.3161 (Dec 12 high) and 1.3080 (daily low).