USD/CAD Daily Fundamental Forecast – July 20, 2017

The oil prices began to rise once again yesterday, after a few days of consolidation and this seemed to be just what the doctor ordered as far as the USDCAD pair was concerned. We had mentioned that the next target of the traders in this pair is likely to be the 1.25 region but with the consolidation and ranging going on, the market was looking for direction from somewhere and that came along in the form of stronger oil prices.

USDCAD Likely to Have Small Bounce

The oil prices are set to rise even further in the short and medium term and this is likely to keep the CAD supported during this period. We also have the BIC supporting the currency very strongly and this, along with some strong incoming data from Canada, has been making the CAD one of the strongest currencies over the last couple of months or so.

Of course, the political and administrative turmoil in the US is helping to make matters worse for the dollar which is suffering all across the board and especially against a strong currency like the CAD. We have not had any meaningful bounce in the USDCAD pair ever since this downtrend began and it remains to be seen whether we would be able to get that once it reaches the important round figure of 1.25. The dollar bulls seem to be crying out for help from some quarter but their cries seem to be falling on deaf ears as the Fed seems to be quite happy to let the dollar continue to be weak.

Looking ahead to the rest of the day, we do not have any major data from Canada but we have the unemployment claims data from the US. The moves in this pair are likely to be dominated by the oil prices, in the absence of any other factors and hence we believe that the USDCAD would continue to weaken.