USD/CAD Fundamental Analysis – week of April 30, 2018

USDCAD pair continued its rise higher from the support region around 1.25 for the second week running and this has helped the pair to recover and trade above the 1.27 region to close the last week. The pair has been under a lot of pressure due to the strength in the CAD and the rising oil prices over the many weeks but over the last couple of weeks, we have seen a reversal in the fortunes.

USDCAD Continues Rebound

The dollar has managed to gain in strength all across the board and this has helped the pair higher. The oil prices have also been impacted by the dollar strength and this has also contributed to the weakness in the CAD. The dollar has been gaining in strength despite the fact that the US has been hit with weak and choppy data over the last few weeks. The employment data came in much weaker and though that led to some weakness in the dollar, it has managed to recover in a quick and strong manner over the last couple of weeks and the dollar bulls seem to be in control now.

The CAD has been on the backfoot ever since the BOC press conference from their Governor where he failed to give any specific timelines for the future rate hikes. A part of the market was expecting the BOC to hike rates this month and the fact that they did not, disappointed them and this led to the weakness in the CAD in the short term. The data from Canada has also not been very supportive of the bullishness and hence the further weakness in the CAD.

Looking ahead to the coming week, we are going to see a slew of data from the US as the focus shifts back to the US economy in the new month. We are going to see the employment data from the US in the form of the NFP and after missing expectations by a huge margin last time around, the dollar bulls would be hoping for a better show this time and if and when that does happen, we should see the pair continue to move up even further in the short term which should push thr pair towards the 1.30 region.