USD/CAD Daily Fundamental Forecast – December 08, 2016

USDCAD consolidated for most of the day as it continued to trade within a small range as it waited for the BOC rate decision later on in the day. There was a talk in a small section of the market which expected the BOC to throw a surprise and cut the rates but alas, that was not to be as the BOC chose to keep the rates on hold.

The BOC also released a statement which basically sounded like a report card more than anything else as it pointed out the positives and emphasised the negatives and acknowledged that there was still some work to be done and that the economy still needed some improvement. There was not much to read into and there wasnt any hints in between the lines but it did seem to disappoint a small section of the market and this, along with the general dollar weakness across the board, due to falling yields, helped to keep the USDCAD under pressure after the release of the statement.

This pressure pushed the pair below 1.3250 and continues to keep it under pressure but as we have been saying for quite sometime now, this does not do anything to change the overall uptrend that we have been seeing. Unless there is a clear break of 1.3000, we continue to believe that the uptrend is intact and will be looking towards the 1.4000 target in the medium term. We believe that the gradual strengthening of the US dollar and the election of Trump as the next President, who will probably try and renegotiate the NAFTA agreement with Canada, will likely have an effect on the pair and will help to push it higher in a gradual manner. Medium and long term traders can look to load their longs around this region with a stop loss just below 1.300.