USD/CAD Daily Fundamental Forecast – August 2, 2017

The USDCAD pair has finally had a decent bounce and in contrast to the previous bounce, when it was quickly sold into and it returned back to where it started, the bounce has been able to hold its own so far today. This points to further gains in the short term though the pair continues to be in a downtrend in the medium term.

USDCAD Bounces Hard

What this implies is that this bounce, however high it might extend to, is also likely to be sold into at one point of time and we should be back to the lows in a matter of a few days. This is only a correction and hence should not be viewed as a change in trend. This should be kept in mind while trying to buy this pair in the upmove. With the overall trend being down, it would be more easier and wiser to look for good points to sell the pair rather than trying to buy it in this move.

Yesterday, the move was brought about by a general recovery in the dollar strength across the board. There was nothing much of note on the fundamental or economic front but the dollar rose more in anticipation of what is likely to come later in the week.

Looking ahead to the rest of the day, we have the ADP employment report from the US and also the oil inventory data as well. The private inventory data yesterday showed a greater build than what was expected which pushed the oil prices lower and hence weakened the CAD. The dollar bulls would also be expecting a strong ADP report which should aid the continuing recovery in the dollar. This report is likely to be considered as the precursor for the NFP report later on in the week on Friday and on the same day, the Canadian employment report is to be released which should guarantee volatility in the coming days.