USD/CAD Daily Fundamental Forecast – April 26, 2017

The CAD was clearly on the backfoot yesterday and this helped the USDCAD pair to easily push through 1.35 and then 1.36 and move as high as 1.3626 during the course of the day yesterday. But later in the day, we saw the oil prices begin to strengthen and this helped the CAD to recover somewhat and pushed the USDCAD prices back below 1.36 and towards 1.3550 during the late session yesterday and thats where it sits as of this writing.

CAD Under Pressure

Yesterday, Trump upped his rhetoric against his neighbours which is something that he had not done over the past few months. He had done this during the start of his Presidency but then chose to lie low on this topic as he had more pressing matters on the domestic front but with those getting settled slowly, he has now shifted his focus back again towards his neighbours as he has now said that he still plans to build a wall in the border across Mexico.

He also said that he would like to renegotiate the NAFTA deal with Canada and took potshots against the dairy farmers in Canada. All this points to a situation where he might be considering restricting the trade with Canada and with Canada doing most of its trade with the US, the economy of the could be affected a great deal if that happens. It is in anticipation of that, that the CAD weakened across the board yesterday.

Looking ahead to the rest of the day, we have the oil inventory data from the US but no data from Canada. The oil prices continue to trade weakly and with the $50 mark acting as a large psychological barrier, we expect the oil prices to continue to be under pressure which will keep the CAD also under pressure. With the Trump rhetoric adding to the pressure, we believe that the CAD will be under pressure for today as well.