USD/CAD Daily Fundamental Forecast – March 21, 2018

The pair has corrected back to the 1.30 region and awaits the Fed
Colin First
USDCAD Wednesday

After making a brief trip over the 1.31 region on the back of some serious dollar strength, we have been seeing the USDCAD pair correct lower during the course of the last 24 hours and the pair now trades just above the 1.30 region as of this writing as the market looks ahead to some important news later in the day.

USDCAD Awaits the Fed

The CAD was boosted yesterday as some of the content for the NAFTA talks were changed and toned down and this was good for Canada who were expecting to get the rough end of the stick. The fact that this did not happen should have come as a relief to the CAD bulls though the respite is likely to be short lived. We have the FOMC announcement later in the evening and this is likely to bring in a lot of volatility in the pair and also determine the short term trend in this pair as well.

The Fed is expected to hike rates later tonight and this is likely to bring in a bit of volatility though this news is well expected and also priced into the market. The traders would be watching the accompanying statement and the press conference for any hints of hawkishness and any signs of timelines being laid out for the future rate hikes during the course of the year. If that comes along, then we are likely to see the dollar get a boost.

But on the other hand, we believe that it would be too early for the Fed to lay out any sort of timeline and this is going to leave the market disappointed. If this happens, then the USDCAD pair is likely to fall through the 1.30 region once again and the pair would be back into range which is likely to only lead to more consolidation and ranging in the coming weeks.

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