USD/CAD Daily Fundamental Forecast – December 22, 2017

The USDCAD pair dropped lower yesterday in what is likely to be the last piece of action that we will be seeing in the pair over the rest of the year. We are entering into the final couple of weekends of the year and it is only natural to expect the volatility and the liquidity to go down as more and more traders move on to their holidays. We can expect the liquidity to pick up only in the new year.

USDCAD Moves Lower

The CAD increased in strength over the day yesterday as the retail sales and the inflation data came in much better than expected. There were no major fundamental drivers for the dollar yesterday and it was all about the CAD and the data from Canada. We had the retail sales data coming in at 0.8% and the CPI data coming in at 0.3% which was useful to boost the confidence in the CAD.

This couple of data points was enough to push the pair through the 1.28 region and back towards the low 1.27s where it continues to trade as of this writing. This ensures that the pair would end the year well within the range that it has been tracing over the past few months. The range has been between 1.26 and 1.28 over this period and try as it might, the bulls and the bears have been finding it difficult to break through this range and it is unlikely that a diminishing liquidity is likely to make the situation easy for them.

Looking ahead to the rest of the day, we have the GDP data from Canada which is expected to bring in some more volatility in the pair but nothing that is likely to help it break through the range. So expect some more consolidation and ranging for the day today as we head into the long weekend.