USD/CAD Daily Fundamental Forecast – October 21, 2016

The USDCAD has been on a continuous march upward since the time that the BOC Governor indicated that they did indeed discuss about easing the Canadian interest rates as a plan for shoring up the economy to overcome the losses through export and also due to the low oil prices over the past year. Till that time, the market was very confident that there would not be any forthcoming rate cuts but now the market realises that the possibility exists in the future and this has led to the weakening of the CAD over the past 36 hours as it bounced off its support at 1.3000 and now sits at resistance region at 1.3247 as of this writing.

This uptrend was also helped by the general trend of USD strength seen in the markets which began during the euro session yesterday. The USD has been gaining against all other currencies and this has been reflected in this pair as well as it broke through 1.3200 as the Canadian session approached and it continues to sit at the range highs for today as well.

Looking ahead to today, we have both the CPI and Retail sales data to be released from Canada later on today and this is likely to bring in a lot of volatility as these are some very strong indicators of the economic strength of any country. The Core CPI is expected to come in at 0.2% while the core retail sales is expected to come in at 0.4%. Any slip in any of this data will further fuel the talk for a rate cut and this could help to push the pair higher through 1.3300, a break of which would then target 1.3500 as first target. If the data comes in worser than expected, then we can expect the pair to fall back into its range between 1.3000 and 1.3300. We have been forecasting an uptrend in this pair for long and we continue to believe that the uptrend is intact as long as 1.2800 holds in this pair. Today may be the day that the pair finally decides to break the range top to begin the next phase of its uptrend.