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USD/CAD Daily Fundamental Forecast – January 20, 2017

By:
Colin First
Published: Jan 20, 2017, 03:17 UTC

The USDCAD continued to trade strongly as the effects of the BOC economic policy continued to be felt in the CAD and the CAD continued to trade weakly all

USD/CAD Daily Fundamental Forecast – January 20, 2017

The USDCAD continued to trade strongly as the effects of the BOC economic policy continued to be felt in the CAD and the CAD continued to trade weakly all across the board as a result of this. The pair trades just above 1.3300 as of this writing and unless there is some drastic weakness in the dollar, which is quite unlikely, we believe that the pair would continue to consolidate near the highs of its range for today and in the short term as well.

The BOC had made it clear that the Canadian economy has not changed much over the last few months and continues to be weak and this may also warrant a change in the interest rates over the next few months. The data from Canada over the last few weeks have been pretty good and have not yet set off alarms as yet but the lower oil prices, on which the Canadian economy is dependent upon, should be a matter of concern for the BOC and it is only a matter of time before it starts reflecting on the data. Maybe the BOC have access to some more recent data which might be a cause for concern but what we do know is that there is a good chance of a rate cut in Canada towards the middle of the year. This is the reason for the continued weakness in the CAD and that is why any kind of correction in the USDCAD has been met with some strong buying. The level of 1.3500 seems to be the first challenge for this uptrend and once this level is cleared, then the market should focus on the medium term target of 1.4000 which we believe would be achieved easily by the end of the first half of the year as the Fed raises the rates and the BOC looks to cut the rates.

USDCAD Hourly
USDCAD Hourly

Looking ahead to today, we have the retail sales and CPI data from Canada that will be released towards the NY session and any sort of weakness in any of these data should confirm the weakness in the Canadian economy that the BOC seems to fear and we could then see the pair pushing above 1.3400 and towards 1.3500.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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