USD/CAD Daily Fundamental Forecast – November 27, 2017

The USDCAD pair has been moving progressively lower since Friday as the dollar weakened across the board on account of the dovish FOMC minutes and also due to the lack of liquidity on account of the extended weekend in the US. This happened after the retail sales data from Canada, which came in much weaker than expected. This led to the pair to move higher as an initial move but once again, it was unable to break through the highs of the range.

USDCAD Still in Range

This led to a period of correction which has been carrying the pair back towards its range lows as the dollar is on the backfoot. This is likely to continue for the first half of the day today as the traders walk in after the weekend but it remains to be seen what is in store later in the US session as the US traders would be at their desks after the long weekend. We could see some profit taking and some dollar buying as well which could push the pair back into its usual range.

The oil prices have been supportive of the CAD over the last few weeks as the prices continue to move higher but the fact that the incoming data from Canada has been weak, is something that should worry the BOC. They would have liked to be in a position to bring in another rate hike pretty soon but with the incoming data continuing to be weak, it is unlikely that they would be in such a position anytime soon and hence we are going to see the rates being on hold for the short and medium term.

This is one of the reasons why the CAD also has been under pressure in recent times and it is likely that it will continue to be so in the short term. It is now upto the dollar bulls to take things by the scruff of the neck and move the pair higher in due course of time and if they do manage to do so, it is unlikely that they are going to find much of an opposition from CAD.