USD/CAD Daily Fundamental Forecast – December 05, 2016

USDCAD continues to consolidate and range as oil prices continue to push higher and now threaten to break through one of the long standing resistances as it marches ahead to $55 and further. The pair has been under the control of the dollar and the oil prices for the past few weeks and these 2 themes have been dominating the price movements of this pair during this time. Last week, we saw the conclusion of the OPEC deal in which the members agreed on oil production cuts in order to push the prices higher and the meeting between the OPEC and non-OPEC producers is scheduled to happen on 10th December to see if they can get the non-OPEC producers on board the deal as well.

This has strengthened the CAD and with the yields in the US also starting to weaken a bit, the pair has come under pressure and it pushed through 1.3300 on Friday. It has since bounced back above 1.3300 as of this morning as the Italian vote and the subsequent weakness in the euro and the risk-off theme has helped to bolster the dollar but we expect the pair to be under continued weakness as long as the oil prices continue to rise. We expect the oil prices to have a small correction before pushing on through to the mid 50s and so the users can expect this pair to be under pressure during this time.

Looking ahead to today, there is not much economic news from the US or the Canadian region but with the results of the Italian vote expected to dominate the markets, we would expect that the attention on this pair would be low and we this pair is expected to range and consolidate on either side of 1.3300 for today. Traders can wait for a bigger correction towards 1.3000 and load their longs if they believe that the pair is in an uptrend, as we do.