USD/CAD Daily Fundamental Forecast – June 28, 2017

The USDCAD pair finally broke through the 1.32 support region during the course of the last 24 hours on the back of strength from the CAD and weakness in the USD which was seen all across the board. This now sets the stage for the pair to move towards the 1.31 region and then further on to 1.30 in the short term and we believe that we are likely to see the next bounce from the 1.30 region and not anytime before that.

USDCAD Breaks Lower

The weakness in the dollar was brought about by the delay in the healthcare reform bill which has raised concern on whether the bill would be further watered down. Also, there is also growing concern that this would begin to represent a trend wherein all the major plans from the Trump administration would begin to hit roadblocks making policy decisions a difficult task. This is clearly negative for the dollar and with the incoming data from the US also not being very good over the last few weeks, the dollar is clearly suffering despite the best efforts of the Fed to ignore the bad data and to prop up the dollar.

On the other hand, the data from Canada has shown an uptrend in the Canadian economy and this is being reflected in the value of the CAD. The BOC also recognises this and that is why they have been saying that the time for rate cuts are over which is a hawkish signal indicating that they would be on hold in the short term and then look to hike rates in the medium and long term. This has propped up the CAD in recent times and with the oil prices also rising steadily since the beginning of the week, the CAD has gone from strength to strength which is why the USDCAD pair has been moving downwards.

Looking ahead to the rest of the day, we do not have any major news from Canada or the US but we have the oil inventory data from the US which should affect the oil prices which will in turn have an effect on the prices of the USDCAD pair.