USD/CAD plummets to fresh two-month lows after Poloz adds to Wilkins hawkish rhetoric

The USD/CAD pair stalled its tepid recovery move near 1.3285 region and ran through fresh offers to refresh two-month lows during early NA session.

The latest leg of fall was led by comments from BOC Governor Stephen Poloz, which added to overnight hawkish rhetoric by Deputy Governor Carolyn Wilkins. Poloz was noted saying that interest rate cuts have done their job and have been extraordinarily low to offset shocks. The latest comments increased odds of BoC rate-hike action before the end of this year and attracted some fresh selling pressure around the major.

Meanwhile, traders seemed to have largely shrugged off today's slightly better-than-expected US PPI print, which reaffirmed persistent inflationary pressure in the economy and provided a minor boost to the US Dollar. 

Moreover, weaker tone surrounding oil markets, especially after the latest OPEC monthly bulletin, did little to hinder the ongoing appreciating move for the commodity-linked currency - Loonie, and stall the pair's slump to the lowest level to nearly 9-week lows.  

With Wednesday's possible Fed rate-hike move nearly priced in the markets, the pair remains vulnerable to extend the ongoing slump further during the NY trading session on Tuesday.

Technical levels to watch

A clear break below 1.3225-20 region (April 13 low) should open room for further slide towards the 1.3200 handle, en-route 1.3185-80 horizontal support. On the upside, any recovery attempts might now confront resistance near 1.3245-50 region, above which a bout of short-covering could lift the pair back towards 1.3285-90 area.