USD/CAD Daily Fundamental Forecast – August 21, 2017

The USDCAD pair continues to move within specific price action, mostly based on the lines that we had set out. After correcting lower on the back of some decent CPI data from Canada, the pair has been moving in a consolidation phase since this morning. This is expected to continue though the downtrend in the pair is clear for everyone to see. This week is also likely to be a bit slow for the Canadian dollar with not much of news around.

USDCAD Moves Lower

On Friday, we had the CPI data from Canada and that piece of data came in as per expectations. This improved the confidence in the Canadian economy and the impact of the hike made by the BOC a month or so back seems to be having the right effect on the economy. Unlike the rate hike in the US, which seems to have made the economy wobbly, as indicated by the choppy data, the data from Canada has been strong over the last month or so. This basically reinforced the fact that the BOC is on the right path and this could probably encourage them to undertake further hikes in the near future.

This was enough for the CAD bulls to start another round of CAD buying and this pushed the pair through the 1.26 region and this has marked the resumption of the downtrend for the short and medium term. We believe that the next target for this bearish leg is likely to be around the 1.24 region in the short term. The rising oil prices on Friday also helped to support the CAD and a combination of these events is likely to keep the CAD well bid.

Looking ahead to the rest of the day, we do not have any major news from the US or Canada for today and so we can expect the consolidation and ranging on either side of 1.26 to continue for the rest of the day.