USD/CAD Daily Fundamental Forecast – January 17, 2018

The pair traded within a tight range as a lack of fundamentals kept the prices on a tight leash for much of the day. There was not any major economic news from the Canadian or the American fronts and hence the prices traded and consolidated just below the 1.25 region and it looks as though it would continue to do so in the short term.

USDCAD Likely to Move Lower

There was not much change in the oil prices and this served to support the CAD. We had mentioned in our forecast yesterday that even if the dollar was to regain back some of its strength and hold steady in the short term, it would not be able to do much by making headway against the CAD as the CAD is likely to be well supported by the oil prices and the anticipation of the markets that the BOC would be hiking rates this month. This is one of the major reasons for the CAD continuing to hold firm.

That part of the puzzle is likely to be solved today as we have the BOC rate announcement as well as the statement scheduled to be released today. We are also going to have a press conference from the BOC Governor later in the day. The improving data from Canada and the bullishness that is generally expected from the BOC has made the markets anticipate a rate hike today. This is likely to act as a major boost for the CAD in the short term and we could see that pair moving towards the 1.23 and further below during the course of the evening if the rate hike does come through.

A combination of dollar weakness and CAD strength should prove to be a double whammy for any bulls that are still left in this pair at this time. We have been advising against going long on this pair for quite sometime over the last few weeks or so and the reason should be apparent now.