USD/CAD Daily Fundamental Forecast – February 15, 2018

The USDCAD appeared to be building up for some serious dollar strength in the short term and the fact that the pair continued to trade near the highs of the range and above the important support figure of 1.25 seemed to suggest that as well. But little did the traders expect that the dollar would basically fall through that region within a matter of few hours and now exposes itself to further weakness in the short and medium term.

USDCAD Crashes Lower

The reason for the dollar to become weak yesterday were the retail sales data and the inflation data from the US. While the retail sales data came in much weaker than expected, the inflation data came in stronger than expected. But overall, on a year on year basis, the inflation was on expected lines and this put paid to the hopes of the traders who were expecting to see some strong data on all fronts which would push the Fed to make some accelerated rate hikes in the coming months.

This pushed the dollar on the backfoot after a brief sojourn higher and it did not take long for the pair to break through the 1.25 region and it continues to trade below this region as of this writing. The pair has also also been pushed below due to the strength in the CAD brought about by the rising oil prices which shot through the $60 region and trades comfortably above that and thus supporting CAD.

Looking ahead to the rest of the day, we do not have any major news from Canada for the day while we still have the PPI data from the US. Depending on how it comes through, we might see the strength of the dollar continue to weaken else we may be in for a period of consolidation in the short and medium term as well.