USD/CAD Daily Fundamental Forecast – December 4, 2017

The USDCAD pair fell hard on Friday as the employment data and the GDP data from Canada came in much stronger than expected. We had mentioned in our forecasts last week that the breakout from the 1.28 region did not look very convincing and that the traders should wait for the news on Friday before confirming the breakout as such and it turned out to be true.

USDCAD Crashes Lower on Strong Data

The employment rate and the employment data from Canada came in much stronger than expectations and this led to a large correction in the USDCAD which has since been pushed back into its range and it now trades below the 1.27 region as of this writing. It looks as though the pair is now again stuck back in the range in which it has been over the last few weeks and we believe that the pair is likely to travel to the lows of the range and bounce again and continue to range as we head towards the end of the year.

As for the dollar, it has been buoyed by the passage of the tax reform bill through the Senate and this is likely to continue in the short term. The focus is likely to remain on the dollar for this week due to the passage of the bill, the developments surrounding the Flynn issue and also due to the incoming data from the US which is scheduled to release later in the week. All of these are expected to keep the dollar buoyed and hence we expect the pair to continue to range.

Looking ahead to the rest of the day, we do not have any major economic news from Canada or the US and so we can expect the pair to consolidate between the 1.26 and the 1.27 region during the day. We do not expect any major volatility till later in the week.