USD/CAD Daily Fundamental Forecast – July 24, 2017

USDCAD continues to trade in a weak manner as there does not seem to be any respite for the dollar. This is expected to continue in the short and medium term as well as the oil prices begin to steady and they are likely to only get stronger in due course of time. Also, the data from Canada continues to be steady as well and the bulls in the CAD seem to be in no mood to relent as of now and have been pushing hard.

USDCAD Still Weak

What is surprising is the fact that this push is expected to continue as the trade has not yet become very crowded so far. On the other hand, the short dollar trade seems to be at one of the highest levels in the past few years and this provides an interesting combination where we see that the long CAD trade still has some way to go while the short dollar trade is getting extended a bit by now and we do not know how exactly this is going to pan out.

The pair broke through 1.25 for a brief while very early in the morning today when the liquidity was very low but has since recovered to be trading above this region as of this writing. We believe that the pair would consolidate and range on either side of this region for the next few days as the pair settles down and waits for the next direction from somewhere.

This is the last week of the month when the trade positioning and month end currency flows are set to dominate the markets. This is also a period when the news events for the week dry up and so expect a lot of consolidation and ranging in the USDCAD pair for today and for the next day or two as the markets look towards the FOMC statement later in the week.