USD/CAD Daily Fundamental Forecast – March 30, 2017

USDCAD weakened yesterday on the back of some strong oil prices. The Canadian economy depends a lot on the prices of oil and that is why we see a situation where if oil prices rise, the Canadian economy would be ultimately benefited and thats why the CAD currency tends to get stronger while the opposite happens when the oil prices going lower. This is one of the reasons why this pair has not crashed through despite the weakness in the dollar as the weakness in the dollar has been balanced off by the weakness in CAD which in turn is a result of the weak oil prices.

USDCAD Continues to Consolidate

Yesterday we saw the release of the oil inventory data from the US and that continued to show some decent inventory but it was much lesser than what was expected. This showed that there was a shortage of oil supply, however temporary that might be, and with the demand being constant, it is likely that the supply and demand balance could be upset leading to an increase in oil prices.

This was what the oil producers hoped for, when they had started off with the production cut deal in January but so far, they have not been able to have too much of an impact on the oil prices. This drop in inventory led to a rise in the oil prices and helped to strengthen the CAD. But at the same time, we saw a return in the strength of the dollar as well as a result of which the USDCAD pair continues to trade within a tight range between 1.33 and 1.34, something which we had mentioned in our forecast.

This is set to continue in the short term as well. Looking ahead to today, we have the US GDP data which is likely to give us a glimpse of the continuing strength in the US economy in the short and medium term but we do not expect this to be enough to break through the range.