USD/CAD Daily Fundamental Forecast – January 29, 2018

The USDCAD posted its first signs of strength and recovery on Friday as the dollar began to recover all across the board during the course of trading on Friday. The pair has been under severe pressure since the beginning of the year and though it was expected that the dollar would be able to regain its foothold quite soon, that has not happened so far.

USDCAD Caught in Range

The dollar has shown some strength towards the end of last week on the back of comments from Trump where he said that he expected the dollar to be strong as the incoming data from the US has been strong. This has led to expectations in the market that the incoming data in the coming weeks would also be strong which would increase the possibility of rate hikes in the near future. This seems to be the only way by which the dollar bulls can hope to gain some of the lost ground as they have been beaten back repeatedly over the last few weeks.

We have some important data coming up towards the end of the week, which includes the NFP employment report and we believe that this would lead to the dollar rising in anticipation of some good data. A part of the market expects the Fed to hike rates in March and this would sow the seeds for 3 rate hikes during the course of the year. The market has the tendency to overrun the actual news and we are likely to see that happen in the coming days as well.

Looking ahead to the rest of the day, we do not have any major news from the US or Canada for the rest of the day and so we are likely to see some consolidation between the 1.23 and the 1.24 regions for the rest of the day today as the traders begin to position themselves for the news and the battles ahead.