USDCAD has been having a quiet few days which is something that we have been forecasting over the past few days. We have been mentioning that with the oil prices buoyant and continuing to be so going forward as the oil production cut agreement gets implemented, we are likely to see the CAD doing well. Add to this the fact that the data which came out from Canada on Friday, where the employment change and trade balance were much better than expected, supporting the CAD as well, in the short and the medium term, we are likely to see strength in the CAD. This would have normally led to a large correction in the USDCAD pair.
But on the other side, we have the dollar also gaining strength. Though it looked weak for some part of last week, the dollar came back strong once the NFP and the average wage earnings data was released. The NFP was slightly below what was expected but what cheered the markets was the increase in average wages which means that the people would be able to sustain further hikes in a much easier manner. This helped to keep the dollar supported and as long as the US continues to throw up good data, we are likely to see the dollar continue to strengthen and this is likely to offset the strength in the CAD. It is this kind of a deadlock that is going to keep the pair within a tight range during the short term.
This is what we saw on Friday as well as the pair made a brief look below 1.3200 but then there was a quick bounce above 1.3200 following the data release and it trades just below 1.3250 as of this writing. Looking ahead to today, we do not have any major economic news from the Canadian or the US regions for today and so we are likely to see the dollar continue to move higher and this will also help the USDCAD pair moves towards 1.3300.