USD/CAD Fundamental Forecast – September 27, 2016

By:

Updated: Sep 27, 2016, 07:45 UTC

It was a strange day overall as far as trading the strong and the weak pairs were concerned. It could not be classified as a day of USD strength or

It was a strange day overall as far as trading the strong and the weak pairs were concerned. It could not be classified as a day of USD strength or weakness and thats where the surprise is as not many days are like this when the trader is confused. Though the USD looked weak against the Euro, it was strong against the Canadian dollar. Of course, this is not something extraordinary as different currencies have different strengths based on their conditions and flows but overall, yesterday could be best described as a mixed day.

It was day which saw the CAD very weak uniformly against all pairs, mainly as a follow up of the weakness that was generated due to the weak retail sales from Canada that was seen last Friday. This weakness has led to the break of the resistance region in the USDCAD pair at 1.3180 and the pair has since progressed beyond the 1.3200 region and continues to look bullish. What adds to the surprise is the weakness of the CAD despite the fact that Oil has been very bullish since the morning. This usually is good for the CAD but not today. Maybe its also due to the fact that we are getting close to the end of the month and maybe the value of the CAD is being affected by some currency flows. if that is the case, then once the flows end, then we should see the CAD correcting but thats for another day.

USDCAD Hourly

As the morning began, the BOC Governor talked about the effects of low oil price on the Canadian economy and said that it would take 3-5 years for the economy to recover. This was enough to feed the bullish run further and the pair reached the strong resistance at 1.3275 and this is where the daily 200 SMA also lies. This proved too much of a hurdle to cross and the Presidential debate also began which usually tends to affect the CAD a lot. Nothing much can be gleaned from the debates anyway but it proved to be an opportunity for the bulls to take profits and for the bears to take over and the pair has promptly dropped down to support at 1.3180 as we write this. If the downward trend continues or if the bear continues to consolidate around this price range for today, then it could be bearish for this pair and the bullish run over the past couple of days can be understood to be due to month-end flows more than anything. The close today would be crucial as any close in the current price region or lower could be very bearish for this pair.

About the Author

Colin Firstauthor

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