USD/CAD Daily Fundamental Forecast – October 24, 2017

USDCAD continues to move higher as the move from Friday seems to have found some renewed vigor and has made the CAD even more weaker than before. The very weak data from Canada on Friday was something than the market had not expected. The market was focussing a lot on the incoming data from the US over the last few weeks and for good reason. The data from the US had been choppy at best, over the last couple of months, and the dollar needed some good data to recover.

USDCAD Awaits the BOC

But that kind of data had not been forthcoming and what we have been seeing is some steady to choppy data from the US which had led to concerns on whether the Fed would be able to plan another rate hike this year, under such circumstances. This has placed a lot of pressure on the dollar and so the market was focussing on the data from the US assuming that the Canadian data would continue to be good, as it has been for a few months now.

So, the weak CPI and retail sales data from last Friday was a shocker and since then, the CAD has been on the backfoot and the USDCAD pair has been pushing higher. Yesterday, the prices broke through the 1.2650 region for a brief while but it was met with a lot of selling and it is likely to face a lot of resistance from here to the 1.2750 region. We have the BOC rate announcement, statement and press conference later in the week and it is likely that the market would wait to hear what they have to say before it makes any major move.

Looking ahead to the rest of the day, we do not have any major news from the US or Canada for today and so expect some consolidation above 1.26 for today as the traders await the BOC.