USD/CAD Daily Fundamental Forecast – February 15, 2017

USDCAD continues to flounder near the lows of its range and even the dollar strength that was seen all across the board yesterday was not enough to push it back off its lows and it trades below 1.3100 as of this writing and it looks weak though we believe that this weakness is more of a consolidation for the next bounce rather than a weakness that has been brought about by a change of trend. We expect this consolidation to continue for the next few days atleast before there comes along some change or a resumption in the trend.

Yesterday, we saw Yellen testify on the monetary policy and the entire market was glued to this to see whether she gives any hints on the rate hikes down the road and also to see whether she would be sounding bullish on the economy. Yellen chose to go along the middle path and tried not to commit on anything specific but she did make it clear that the Fed is looking for multiple rate hikes this year and she kept the door open for a rate hike in March as well. This cheered the markets and led to a risk on mode in the markets. This also led to a further strengthening of the dollar which then caused the USDCAD pair to break back through 1.31 for a brief period. But the bulls were not able to sustain the move and it quickly withered away and we are back down to the bottom of the range.

Looking ahead to today, we have the Manufacturing sales data from Canada and we also have the retail sales and CPI data from the US. We also have Yellen testifying on the monetary policy once again and all of this should guarantee a lot of volatility. It remains to be seen whether all these events would finally lead to a resumption of the uptrend or whether the support region around 1.300 would come under severe pressure again.