USD/CAD Daily Fundamental Forecast – December 19, 2017

The USDCAD is yet to break through the highs of its range as the pair consolidated over the last 24 hours and there has been no sign of any breakout at this point of time. We had expected the dollar to trade in a strong manner yesterday but none of it came to fruition as the market turned cautious ahead of the voting on the tax bill in the US.

USDCAD Looking Higher

The tax bill is expected to give a lot of tax cuts for the corporates helping to spur their profits even further and this is likely to push the strength of the dollar even further. The dollar had gained in strength on Friday based on this and we had seen the pair climb to the highs of its range as a result of that. We expected more of the same yesterday but that did not happen and hence we saw a slight correction in the prices during the course of trading yesterday.

The tax bill is expected to be passed in a day or two and when that happens, the dollar is going to find some love again and this should bring the highs of the range back into focus. It is going to be a battle between the bears and the bulls over the next few days, as far as this pair is concerned, as we are going to see the GDP and the retail sales data from Canada later in this week. All these events are likely to bring in a lot of volatility in this pair over the short term.

Looking ahead to the rest of the day, the lack of any major economic news in US and Canada for the day would mean that the focus is completely and firmly on the passage of the tax bill in the US. It remains to be seen whether its passage it enough for the pair to push through 1.29.