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USD/CAD Daily Fundamental Forecast – October 26, 2016

By:
Colin First
Published: Oct 26, 2016, 03:41 UTC

The USDCAD pair continued to consolidate its gains within a narrow range for the past 24 hours as it continues to digest the information shared by Poloz

USD/CAD Daily Fundamental Forecast – October 26, 2016

The USDCAD pair continued to consolidate its gains within a narrow range for the past 24 hours as it continues to digest the information shared by Poloz and decides its next course of action. Technically, it can be view as consolidation and rest before the next stage of the uptrend that could begin anytime soon. The pair has been helped to be buoyant by the increasing expectations of a rate hike in the US in December and a rate cut in Canada over the next few months. 71% of the market expects a rate hike in the US in December and we do not know how much of this has already been priced in. Hence any disappointment on this front could turn out to be a big blow for the USD and even a rate hike in December may not be too positive for the USD as most of it is already priced in.

USDCAD Hourly
USDCAD Hourly

On the other hand, what helps this pair is the continuing weakness in the Canadian economy that has been reflected in the key economic data being released over the last few weeks. This was also pointed to by Poloz in his press conference where he kept the option for a rate cut over the next few months. This combination of a possible rate hike in the US and a possible rate cut in Canada is what keeps USDCAD buoyant and we can see this every time when the price keeps bouncing back up whenever there is a correction due to some news release from the US or Canada.

Looking ahead to today, there is no major news that is scheduled to be released from the US or Canada with the only news of note being the oil inventory data. This is likely to have some impact on this pair as the Canadian economy depends a lot on Oil but we believe that it is unlikely to change the uptrend in this pair. We believe that the pair will continue on to its target of 1.3500 in the short term and the target of 1.4000 in the long term.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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