USDCAD took a hit yesterday and it continues to suffer today as well as the dollar weakened across the board yesterday and today morning though there has not been much in terms of economic news to drive these kind of moves. There has been some risk off mood in the markets as the oil prices came down due to excess build up in the reserves from North America. The theme of the Brexit process and the risks surrounding it also tend to haunt the markets and this has been attributed as the reason for the general risk off mood and the weakening of the dollar.
We also have the Trump administration beginning to take charge and the market is still not clear on what to expect from his team in terms of his campaign promises and how trade between the US and its neighbours and other major countries is going to be affected with his administrators in charge. With so much uncertainty and risks around, there has been a dollar sell off across the various instruments and this was seen in the USDCAD pair as well as it continues to consolidate in the bottom of its range.
Looking ahead to today, we do not have any major economic news from the US or the Canadian regions and so we can expect the prevailing trends to dominate the price moves for today. We continue to believe that the price region around 1.3000 would be the key and as long as there is no clear break of this price region, we believe that the uptrend in this pair is still intact. With oil prices also correcting and in danger of correcting further due to the geopolitical tensions and probabilities, we favor CAD weakness and dollar strength in the medium term and for that to happen, it is important that 1.3000 holds.