USD/CAD Daily Fundamental Forecast – July 11, 2017

Like most of the other currencies yesterday, the USDCAD pair also spent most of the day yesterday consolidating and trading within a tight range with no specific direction. The lack of news and economic data was a reason for the lack of volatility and the traders would hope that things would improve from today and make it an interesting day of trading.

USDCAD At the Crossroads

The pair is in a downtrend in the short and the medium term and there is some important news waiting around the corner for the CAD. We have the rate announcement from the BOC followed by the rate statement and the BOC press conference as well. While most of the market believes that the BOC would hike rates and that would mean that the focus then shifts to the statement, there is still a part of the market that believes that the BOC may choose to wait a bit longer before it hikes rates.

So, as can be seen, the rate hike is not fully priced in as yet and even in such a case, we are seeing this pair below 1.29. So, if the BOC does hike rates, we could see the USDCAD pair moving even lower in the short term and then 1.28 and below could come into focus. On the other hand, if the BOC chooses to wait, we could see a relief rally which would cause the pair to bounce towards the 1.30 area and we believe that this bounce would be short lived as the accompanying statement and the press conference is likely to provide a lot of hints on when the rate hike would be.

Looking ahead to the rest of the day, we do not have any major news from Canada or the USA and so we can expect some consolidation on either side of 1.29 for the day.