Forexpros – The U.S. dollar tumbled more than 1.5% against its Canadian counterpart on Wednesday amid a rally in riskier assets after six major central banks announced coordinated measures to provide liquidity to the global financial system.
USD/CAD hit 1.0124 during early U.S. trade, the pair’s lowest since November 14; the pair subsequently consolidated at 1.0157, falling 1.57%.
The pair was likely to find support at 1.0078, the low of November 14 and resistance at 1.0293, the high of November 17.
The Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank said in a joint statement that they had agreed to lower dollar swap rates, in a coordinated move aimed at preventing a lack of liquidity in the global financial system.
The surprise announcement came after the People’s Bank of China said that it plans to cut banks reserve requirement ratios by 0.5%, in an effort to help boost liquidity and support the world’s second largest economy amid global market turmoil.
Risk appetite was further boosted after a report from payroll processing firm ADP said U.S. private sector employment increased by a seasonally adjusted 206,000 in November, blowing past expectations for an increase of 130,000.
The previous month’s figure was revised up to a gain of 130,000 from a previously reported increase of 110,000.
The increase in November was the largest monthly gain since last December and nearly twice the average monthly gain since May when employment decelerated sharply.
In Canada, official data showed that the economy expanded broadly in line with market expectations in September, with gross domestic product increasing by a seasonally adjusted 0.2%, bringing the annualized rate of growth to 3%, outstripping expectations for a 2.7% year-on-year increase.
The Canadian dollar was also higher against the euro, with EUR/CAD shedding 0.35% to hit 1.3695.
Later in the day, the U.S. was to release official data on manufacturing activity in the Chicago area as well as a report on pending home sales.
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