USD/CAD Daily Fundamental Forecast – June 15, 2017

A lot of action was expected from the USDCAD pair yesterday but it chose to trade within a tight range. It was probably due to the fact that the pair had already fallen a lot in the preceding days and the traders were more intent on consolidation and position adjustment and profit taking rather than wanting to take more risks at this point of time. So, the whipsaw action that we had seen in most of the other dollar related pair was not so profound in this pair and this helped it to trade within a tight range.

USDCAD Still Looking Bearish

The pair did drop below 1.32 and threatened the strong support in the 1.3160 region for a brief while following some very weak data from the US. The Retail sales and the CPI data from the US disappointed the market and for a few hours, there was a lot of dollar selling as fears that the Fed might choose to delay the rate hike, on the back of this bad data, began to do the rounds. This pushed the pair towards the strong support region but it bounced from there later in the night as the Fed stuck to its guns and did hike rates.

This helped to bring in some dollar buying which then pushed the pair back above 1.32 and it trades comfortably above that as of this writing. As we had mentioned, a correction in the downtrend back towards the 1.33 mark is very much on the cards but we do not see the pair moving much beyond that mark as the data from Canada continues to improve raising prospects of a rate hike from the BOC pretty soon.

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. But the market is likely to be dominated by the reaction to the Fed announcement yesterday which is likely to keep the USDCAD well bid for the next few days.