USD/CAD Daily Fundamental Forecast – May 23, 2017

USDCAD has been going all downhill since it reached the highs of its range at the 1.38 region in the beginning of the month. The pair has been hit hard by the weakness in the dollar and the strength of the CAD which has happened due to the increase in the oil prices. This oil price increase has helped to mask the happenings within the Canadian economy and has provided the much needed strength to CAD and that is why we have been seeing this pair going all downhill over the last couple of weeks or so.

USDCAD In Trouble

It now trades in a very crucial region of 1.35 and it still looks quite weak as well. The troubles of the dollar do not seem to have gone anywhere and the weak dollar has been the dominating theme in the markets over the last week or so. The dollar has been hit hard by the political troubles of Trump which has in turn affected the economic and monetary policy of the US. So, what seemed like a cakewalk for the interest rate bulls, now seems like an uphill journey. The market had been pricing in a Fed rate hike in June but now with all these events, the market is quickly unravelling all its dollar longs.

Also, as said above, the CAD has been helped by the rising oil prices which has helped to mask the banking troubles in Canada where the banks have been downgraded by the ratings agencies. It has also helped to mask the problems in the housing sector and HCG, in specific, in Canada and has helped to keep the CAD buoyed amidst all these issues.

Looking ahead to the rest of the day, we do not have any major economic news from Canada or the US but we have a couple of Fed members speaking and the market would expect them to touch upon monetary policy. This is likely to keep the pressure on USDCAD for today and lead to them breaking the strong support.