USD/CAD Daily Fundamental Forecast – August 29, 2017

The USDCAD pair has done an impressive bounce from its lows over the last 24 hours on the back of some weak oil prices. This has now led to a situation where it is a bit confusing for the traders to go long or short on this pair and hence the traders would be well advised to stay away till the dust settles down. The pair moved higher from the lows of its range and has since broken through the 1.25 region as of this morning and sits just above it.

USDCAD Bounces Off Lows

Though the basic fundamentals continue to favor the downtrend, the fact that we have bounced from the lows of the range is something that needs to be noted with caution and we have to see whether this raises the chance of a full fledged recovery in the pair. The move up was mainly due to the weakness in the CAD brought about by a fall in oil prices. The fall in the prices of oil was due to concerns over demand as many refineries have been shut down following Hurricane Harry in the US. Though this shut down and hence the drop in demand is likely to be short lived, it is good to be cautious.

We also have a range of news as we enter the new month in the second half of the week and depending on how the news pans out, we might see a recovery in the dollar. The news includes the employment report in the form of NFP and if it comes out stronger, we might see a bout of dollar buying. So the direction in the USDCAD pair is yet unclear and it is better to stay out under such circumstances.

Looking ahead to the rest of the day, we do not have any major news from Canada and we only have the consumer confidence news from the US. So, we expect some consolidation in the USDCAD pair on either side of 1.25 during the course of the day as the market awaits further developments.