USD/CAD Daily Fundamental Forecast – October 27, 2016

USDCAD continues its bullish tone and is seen challenging its range top as of this writing. Once this top is broken, which we believe is only a matter of time, we could see the path open for 1.3500 which was one of our initial targets. Then after that, we could see some consolidation and ranging before the pair sets sights on its medium term target of 1.4000. Over the last 24 hours, the pair has been helped by the falling oil prices which, after a period of trying to break through $52, has settled down below $50 over the past couple of days due to the strengthening USD and also due to data which show that the oil inventory continues to build despite the best efforts of the producers to curtail supply by cutting down on the production.

Falling oil prices are not good for the Canadian economy which depends a lot on the oil price and these low oil prices over the last couple of years has severely dented the economic strength of Canada and this is clearly seen in the data being released from the region over the past few months and has also led to the BOC seriously consider cutting rates. As long as oil continues to be weak or continues to range, we can see the USDCAD going from strength to strength. The general USD strength that has been seen across the board overnight and this morning has also helped to keep this pair bouyant and it is only a matter of time before we see 1.3400 and then 1.3500.

Looking ahead to today, we have the unemployment claims from the US and the Durable goods data as well and we should see the pair continue to remain bid through the day. if the break through the range top does not hold, we should see the pair come back towards 1.3330-50 while a clear break of the top should see the pair target 1.3500. We do not have any major data scheduled to be released from Canada for this week or even for Friday.