USD/CAD Daily Fundamental Forecast – June 21, 2017

The Canadian dollar finally decided to react a little to the lower oil prices yesterday, after having ignored the oil prices for the past couple of weeks. But this is likely to be a small correction in the downtrend rather than any change in trend at this point of time as the strength of the downtrend is simply too strong for it to be reversed anytime soon.

We have been mentioning in many of our forecasts that the CAD has basically ignored the oil prices over the past couple of weeks and has been intent on gaining traction across all currencies during that time. This has helped the USDCAD pair to crash through 1.35 and head towards the 1.32 mark during that period of time. The fact that the CAD has chosen to ignore the oil prices so far  is indeed a big surprise as the Canadian economy depends a lot on the oil prices and hence CAD and the oil prices have generally been tied to each other a lot.

USDCAD Bounces as Downtrend Corrects

Yesterday, we saw the first reactions of the CAD to the falling oil prices. Oil prices threatened to break through its strong support and make a big move lower on supply issues and this weakened the CAD and helped to push the USDCAD pair higher through 1.3250 where it continues to sit as of this writing. We expect a move towards 1.33 atleast as a correction of this downtrend but with the oil inventory data later today likely to bring in a lot of volatility, it remains to be seen whether there is a breakdown in the oil prices and if there is, it could push the pair higher.

Looking ahead to the rest of the day, we do not have any major news the US or Canada and this is expected as we are into the second half of the month when the economic events dry up. All eyes will be on the oil prices and the oil inventory data to look for further breakdown in the oil prices.