USD/CAD: Stubbornly bid through 1.28 post BoC' Poloz

• USD/CAD hits 10-week high as market rules out further BOC rate hikes in Dec/Jan.
• BoC's main concern resides on NAFTA uncertainty, CAD high level.
• USD/CAD has extended excessively post BOC, risk of profit-taking as NY traders exit longs.

USD/CAD has kept the bullish pressure intact past 1.28 following the press conference by BoC Governor Poloz, which was perceived as reinforcing the markets' verdict of a disappointing neutral stance by the Central Bank, suggesting that Dec and Jan rate hikes are out of the picture.

NAFTA uncertainty weighs on cautious BOC

BoC monetary policy decision was seen as prudent, emphasizing the uncertainty that currently reigns over NAFTA. The markets' immediate verdict was that near-term rate hikes are no longer considered. Comments made on the loonie weighing on inflation and exports were yet another negative layer to add to the disappointing statement, feeding into the CAD selling frenzy. The stance by the BoC is in line with the cautious steps required amid high household debt; The BOC appears to feel comfortable to wait and see how the past two rate hikes play out in the Canadian economy. While the BoC left little room for a possibility of near-term rate hikes, the comments that 'less monetary stimulus will be required over time’ suggests that the hiking cycle is not over. 

USD/CAD technicals

Having broken through the round number at 1.28, according to FXStreet's confluence indicator, the next area of resistance is seen at 1.2825/30 (Fibo 161.8% 1M, PP 1M R2); given the excessive range seen (185 pips so far), it's unlikely that the spot can find much higher levels as volatility dries up and traders take profits for the day. Should a further rise occur in coming hours, 1.2850 (mid-round number) and 1.2870 (PP 1W R3) are the next hurdles. On the downside, 1.28 is the first support, followed by 1.2780 (1-month high broken) ahead of 1.2750 (PP 1W)

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BoC's Poloz: NAFTA risk is outside of our projection

BoC's Poloz: We continue to be more preoccuped with the downside risks to inflation 

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