USD/CAD Daily Fundamental Forecast – December 2, 2016

USDCAD finally came under pressure yesterday as the pair broke through 1.3400 and then 1.3300 and sits just below that as we write this. The pair had been consolidating and ranging with no specific direction for quite some time as the strength in the CAD was balanced by the strength in the USD. But yesterday, we saw some dollar weakening across the board as the dollar underwent some correction after all the bullish run that it has been having over the past few weeks. On the other hand, the CAD gained in strength as the oil prices shot through the roof as the news and the details of the agreement between the various OPEC members came through and the market was happy that finally, the oil producers managed to agree on production cuts which would lead to an increase in the oil prices gradually in the medium term.

This opportunity was well utilised by the sellers in the pair and a weak close of the pair during November also helped to build confidence in the bears who pushed down the pair through 1.3300 and we can expect some more weakness in the pair during the coming days as oil prices continue to increase. The Canadian economy depends a lot on oil prices and any increase in it would help their economy greatly and build CAD strength.

Looking ahead to today, we have the Employment change data from Canada and the NFP report from the US. Both of these data pertain to the creation of jobs in either of these regions and these are an important parameters to judge the strength of any economy and hence would be watched very closely by the traders. We have to wait and see whether the US continues to throw up good economic data, as has been the trend of late, or whether the data will slip up. If both the data come out well, we could see some more consolidation on the lower side of the ranges while if the Canada data comes out good, then we can expect the USDCAD pair to test 1.3200.