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USD/CAD Fundamental Analysis – week of May 28, 2018

By:
Colin First

The pair has managed to recover its losses and looks set for some ranging

USDCAD Weekly

The USDCAD pair rose higher during the course of the week, basically recovering all the losses that it had suffered in the previous week. The fact that the oil prices have moved lower and the dollar continues to trade in a strong manner are the 2 main reasons why we have been seeing the pair move higher during this period and it closed the week just short of the 1.30 region.

USDCAD Moves Higher

The dollar continued its march higher over the past week despite the fact that the Fed did not sound as hawkish in its FOMC minutes as a part of the market expected it to. It appeared to repeat what it has been saying over the last couple of months and it failed to add on anything about how the Fed plans to push through its rate hikes when the economy and the data that is coming in from the US continues to be choppy. It also failed to identify any specific timelines for the future rate hikes and it is likely that the future data would have a large bearing on which direction the dollar is likely to take.

USDCAD Daily
USDCAD Daily

Over the last week, there was very little by way of data from Canada but the focus was on oil and the oil prices as well. Though the increase in geopolitical tension between the US and North Korea seemed to favour the safe haven currencies and instruments, it led to a weakening of the oil prices and it also had an impact on the CAD as the Canadian economy depends a lot on the oil prices. This pushed the CAD lower and this also contributed to the pair moving up during the last week.

Looking ahead to the coming week, it is going to be a week of 2 halves with holiday and month end likely to dominate the moves in the market over the first half and the data from the US likely to dominate the markets in the second half of the coming week. Looking at the technical signs, we are probably going to have a period of correction in the dollar strength over the coming weeks and this is likely to give some respite for the bears in this pair. We could be in for some serious ranging and consolidation in the short term.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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