USD/CAD Daily Fundamental Forecast – December 27, 2017A combination of higher oil prices and strong incoming data has lent support to the CAD for the short term
The USDCAD has been suffering from the double blow of a weak dollar and a strong CAD and this has helped the pair to move towards the low 1.2600s over the last 24 hours and this weakness is likely to continue for the short term. But at the same time, it remains to be seen how far we can take this move lower into account considering the fact that it is happening on low liquidity.
CAD Gains in Strength
It was a holiday in most parts of Europe yesterday and hence it is likely that a large number of traders were not trading and this led to very low liquidity during this period. But the bears in this pair seem to have made best use of this opportunity as they pushed the pair lower and lower during this period. The CAD strength has been boosted by the strength in the oil prices and also due to the strong incoming data from Canada which has helped the CAD to remain steady.
The oil prices have also been steadily moving higher over the last 2 days or so and now trade just short of the $60 region and this has also helped the CAD to grow in strength as the Canadian economy depends a lot on the oil prices. A combination of these factors and the dollar weakness is likely to eep the pair under pressure though we do not see any major breakout in the short term as the markets are still in a holiday mode.
Looking ahead to the rest of the day, we do not have any major news from Canada while we only have the CB consumer confidence data from the US which is unlikely to bring in a lot of volatility. So expect some consolidation and ranging for the rest of the day.