USD/CAD Daily Fundamental Forecast – June 30, 2017

USDCAD prices are under some strong pressure as they have been since the beginning of the week. The dollar has been having a tough time across the board despite the slightly better than expected GDP data from the US that came in yesterday. This has not reduced the uncertainty over the dollar which has been brought about, not by economic factors, but more due to political factors like the policy paralysis that is being seen now, due to the Republican infighting.

USDCAD In Dire Trouble

This has seriously affected the confidence in the Trump administration and also put into question on their effectiveness in pushing through some major policy changes, like the tax cut plan, in the upcoming months. Though the Trump administration might be happy that the dollar is weak, the Fed may not be very happy with the way that it has been achieved as they would have liked to take an economic and monetary path to achieve this kind of a weakness rather than a political path.

On the other hand, the CAD has been going from strength to strength with the full support of the BOC and the economy as a whole. This can be seen from the hawkish statements of the BOC leaders on policy reversal and also in the incoming economic data from Canada which has been improving over the last fee months. Also, after a large fall over the last few weeks, we have seen the oil prices recover during this week which has also helped to support the CAD and pushed the USDCAD towards key support.

Looking ahead to the rest of the day, we do not have any major news from the US but we have the GDP data from Canada and also the Business Outlook Survey and another round of hawkishness from these data points and events could see the USDCAD pair finally break through the strong support in the 1.2980-1.3000 region. On the other hand, weak data would mean that there would be a bounce in the prices which would be a chance for the bulls to get out at better prices.