USD/CAD Daily Fundamental Forecast – October 23, 2017

The USDCAD pair shot higher on Friday on the back of weak incoming data from Canada and this has since helped the pair to push through the 1.26 and now target the 1.28 region in the short term. It looks as though the current round of the battle is being won by the bears and it is likely to continue to be so atleast until the bigger news are out later in the week.

USDCAD Looking Higher

The CAD suffered a lot on Friday as the CPI and the retail sales data from Canada came in much weaker than expected. This was a large and unexpected setback to the CAD as the data from Canada had been good to steady over the last few months and it was expected to continue to be so as well. This also probably ensures that the BOC would not be thinking of another rate hike anytime soon which is again contrary to what the markets was expecting from the BOC.

The BOC Governor Poloz probably had an inkling of what was there to come as he said that he did not have any timeline for the next rate hike, in a speech a couple of weeks back. The market should have taken a cue from such a message and this is probably one of the reasons why the pair had been moving higher over the last week or so and this bad incoming data on Friday has more or less confirmed that the next rate hike, if possible, would come along only at the beginning of 2018. The market would expect one last confirmation for this during the BOC rate statement and press conference and depending on how those events pan out, the pair might be looking even higher.

Looking ahead to the rest of the day, we do not have any major news from the US or Canada for the day and so expect some consolidation in the pair with some bullishness underneath. With the pair now free of the 1.26 region, the only direction for it to move for the short term is higher and we expect the situation to be the same for today as well.