USD/CAD consolidates overnight BOC-led slump, manages to hold above 1.22

The USD/CAD pair was seen consolidating the post-BOC slump and oscillated in a narrow trading range above the 1.2200 handle.

The pair on Wednesday plunged by over 250-pips to its lowest level since mid-June 2015 after the Bank of Canada delivered a surprise rate hike and raised its key benchmark interest rates by 25 bps to 1.0%. 

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Following the announcement, spot tumbled to an intraday low level of 1.2131 but managed to pare some of its sharp losses to move back above the 1.2200 handle.

A modest US Dollar rebound, following the release of US ISM non-manufacturing PMI and a three-month extension of the US debt ceiling, helped limit further losses, at least for the time being.

This coupled with a mildly softer tone around crude oil prices also did little to provide any fresh bullish impetus to the commodity-linked currency - Loonie, and has eventually led to a subdued range bound price action through early European session on Thursday.

Today's economic docket features the release of weekly jobless claims from the US, followed by the Canadian Ivey PMI and crude oil inventories data, which would now be looked upon for some fresh impetus later during the NA session.

Technical levels to watch

Renewed weakness back below the 1.2200 handle could drag the pair back towards multi-month lows support near 1.2130 level ahead of the 1.2100 round figure mark. On the upside, sustained recovery beyond mid-1.2200s could trigger a short-covering bounce beyond the 1.2300 handle towards the previous support now turned resistance near the 1.2335-40 region.