USD/CAD Daily Fundamental Forecast – January 16, 2017

USDCAD continued to trade near its range lows as the dollar is yet to recover its strength and the oil prices continue to remain buoyant which has helped to keep the CAD supported in the short term. We did see the pair make a brief trip below 1.3100 on the back of some serious dollar weakness across the board but as has been usual, this was quickly met by some serious buying and this helped the pair to bounce back above 1.3100 and it trades above that figure as of this writing.

Over the last couple of months, we have been constantly mentioning about the uptrend in this pair and how it is likely that every correction in this pair is met with a quick and strong bounce and we have been seeing this happen time and again. The progress towards our medium term target of 1.400 has been very slow but it has been steady and the overall uptrend has helped the bulls to buy each correction with confidence. Lately, we have been seeing more and more buyers in this pair and we also hear that some banks have also started advising their clients about the target of 1.40. But it has to be taken with a pinch of salt as the data from Canada over the last few weeks have been consistently strong contrary to the expectations that the Canadian economy is getting weaker. We also have not seen the expected strength from the USD as fears around the Trump Presidency continue to mount. That is the reason why we advise our traders to keep a hard clean break below 1.3000 as the sign that the uptrend may be over.

Looking ahead to today, we do not have any major economic news from the Canadian region and it is in fact a bank holiday in the US. So expect some more consolidation and ranging near the range lows for the day.