USD/CAD Daily Fundamental Forecast – August 14, 2017

USDCAD pair corrected during the course of last Friday as the pair was hit by the weakness in the dollar due to the CPI data missing expectations. The CPI data came in at a lower than expected value of 0.1% when the expected value was 0.2% and this brought in a bout of weakness in the dollar which helped the pair to move lower. The region around 1.2660 is likely to be the key for the bulls and the bears alike and a move below this region would signal the resumption of the downtrend.

USDCAD Likely to be Under Pressure

We had mentioned a few times in our early forecasts that the current move up in the USDCAD pair was likely to push the prices towards the 1.2750 region and thats the price action that we saw on Friday. From that region, the prices have since corrected through the 1.27 region and rests below this region as of this writing. Though the pair has turned weak, it continues to trade above the 1.2660 region which means that the bulls are still in temporary control as far as this pair is concerned.

We still believe that the pair is in a downtrend and that this move up is only a correction of the larger downtrend. But a move below 1.2660 is required to confirm this assumption. The BOC is likely to stay hawkish as the economic data from Canada has continued to stay strong despite the rate hike. On the other hand, the weak inflation data from the US has led to a delay in thoughts of the next rate hike from the Fed and this is likely to keep the dollar under pressure in the short and medium term.

Looking ahead to the rest of the day, we do not have any major news from Canada or the US as this is the first day of the week and hence the volatility is likely to be low as the traders return back to their desks after the weekend. We believe that the trend of the dollar weakness is likely to continue in the markets for today which should keep the USDCAD pair under pressure.