USD/CAD Daily Fundamental Forecast – August 7, 2017

The USDCAD pair has continued its recovery since Friday, helped in no mean measure from the strong NFP data. The recovery in the USDCAD had begun much earlier in the week and it was basically a warning to the dollar bears that something bigger was coming later in the week. On Friday, we had the employment reports from both Canada and the US and it had pointed to a day of large volatility in the pair.

USDCAD Continues Recovery

The Canadian employment reports basically came along expected lines and this did not move the markets by much but the NFP from the US came in at a much stronger value of 209K when the expected value was only 180K. The wages data from the US also came in very strongly which confirmed that the data from the US was getting better. One of the reasons for the dollar falling over the last few weeks was the fact that the economic data from the US had been weak and choppy over the period and we had pointed to the same as well.

The dollar bulls had been hoping for the turn around in the data to start from the NFP and they got their prayers answered with a strong NFP which continued the recovery in the USDCAD pair as it shot through 1.26 and it trades comfortably above that as of this writing. We expect this strong recovery to continue through till the mid-1.27s atleast which is when the traders would be faced with a question of whether this is a correction, which means that the down trend would likely resume again, or whether this would be a full fledged reversal in the dollar.

Looking ahead to the rest of the day, we do not have any major news from Canada but we have a couple of Fed members speaking in the US. We expect some consolidation to happen with a bullish bias for the rest of the day.