USD/CAD Daily Fundamental Forecast – August 8, 2017

The USDCAD pair tried to move higher during the course of trading yesterday. It was generally a slow day of trading as the liquidity and the volatility was low all across the markets and this happened due to the fact that it was Monday, when there is a lack of economic events and news to drive the markets and it was also summer in many parts of the world. The markets are likely to be thin for the rest of the month as well as many traders go on their holidays.

USDCAD In Middle of Correction

It is during this period and towards the end of December that the markets generally tend to be very thin and it can work in both ways as far as trading is concerned. On the one hand, this thin trading could mean that the markets are slow with not much of movement and trading opportunities but on the other hand, this could be used by large banks and investors to move the markets in their direction. This is something similar to what we saw in the USDCAD pair yesterday as it moved up to break through the 1.27 region in thin conditions though there was not much dollar strength elsewhere in the market.

The oil prices have also been steady over the last few days which has helped to stabilise the CAD and hence this move was promptly met with a lot of selling and the move was reversed all the way through and it now trades just above the 1.2650 as of this writing. We continue to believe that this move up in the pair is only a correction of the downtrend and that the downtrend is likely to resume anytime soon.

Looking ahead to the rest of the day, we do not have any major news from Canada or the US and so we expect some more consolidation and ranging in this pair with a bearish bias for the day.