USD/CAD Daily Fundamental Forecast – June 27, 2017

The USDCAD prices continue to trade between the tight range of 1.32 and 1.33 as there has not been any major fundamental developments over the last 24 hours that is likely to move the pair this way or that just yet. The dollar has been strengthening across the board since the release of the durable goods data from the US but this has been met with rising oil prices that have helped to support the CAD on the other hand. This events have basically cancelled out each other and that is why we are seeing a stalemate in the prices.

USDCAD Continues Within Tight Range

The oil prices continue to lounge in their lows but the escalating tension in the Middle East has helped to support the prices as a result of which, the oil prices have bounced above $43 for now. We have repeatedly mentioned that CAD strength depends a lot on the oil prices and as the prices move higher, we should see the CAD progressively strengthen. On the other hand, we are likely to see the dollar also strengthen.

The Fed chose to ignore the weak incoming data over the last month or so and went ahead with the rate hike for June, as promised. But the market isnt quite convinced about the strength of the dollar nor is it very sure of when the next rate hike would be. It is under these circumstances that we are seeing the markets focus on the incoming data from the US in the short term to see if the Fed was indeed right in ignoring the incoming data and also to see whether the new data shows some strength in the economy as the Fed expected to. So, as the data strengthens, we should see the dollar strengthen as well.

Looking ahead to the rest of the day, we have the Fed Chief Yellen making a speech later in the day but we should see the USDCAD pair continue to consolidate within this tight range for the short term

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