USD/CAD Daily Fundamental Forecast – March 27, 2018

The USDCAD pair has been trading near the mid 1.2800 region for the past two days as the traders await the next direction. The pair has been trying to find some strength so that it can move higher in due course of time but that has not happened so far due to the weakness in the dollar that has been seen all across the board.

USDCAD In Consolidation

Looking at the dollar, we believe that the dollar is likely to be on the backfoot for the medium and long term. The US government has been following a nationalistic policy over the last few months and though this would be useful for the US economy and the dollar in the short term, it is unlikely to benefit anyone when the other countries decide to bite back at the US. This is something that the market realises and that is probably one of the reasons why we are seeing the dollar in a weak state.

On the other hand, the BOC is known to be hawkish and Canada does not seem to have been affected too much with respect to the tariff plan. The US government seems to have spared its neighbours, atleast for the time being, and this is something that is positive for the CAD. The BOC is expected to hike rates three times this year though there has been no hints of the same from them. They are known to be hawkish and hence nothing can be ruled out.

We would not be surprised if they managed to satisfy the market aspirations in this regard and this, along with the stronger oil prices, is expected to keep the CAD well bid in the coming days. For the short term and for today, it is likely that the pair would consolidate and range for the rest of the day as the traders loo for renewed direction.