USD/CAD Daily Fundamental Forecast – October 25, 2017
The USDCAD pair continued to move higher ahead of the important BOC meeting, statement and announcement today. It is likely to be a volatile day which could determine the short and medium term direction for this pair. The short term direction should not bother the markets too much but the statement today could have an impact that is likely to last for the medium term and that is what the market would be interested in.
USDCAD Awaits BOC
The pair continued to move towards the 1.27 region but has not managed to break through so far. It would be interesting to see what the price does post the announcement as the prices are likely to face a lot of selling in this region till the price pushes through the 1.2750 region. The market would like to see whether the BOC continues to be hawkish despite the weak data that we have been seeing from Canada over the past couple of weeks. The market had gotten ahead of himself after the rate hike from the BOC and had believed that there would be another rate hike pretty soon.
In fact, the market assumed that it would be so and with the data at that time being strong, the market could not be faulted for assuming so. On the other hand, the BOC governor has not sounded too hawkish since that time and went as far as to say that he doesnt have a timeline for the next rate hike. The incoming data from Canada over the last couple of weeks has also been surprisingly on the weaker side and a combination of these events could place the BOC under a difficult position as far as the rate hike is concerned.
Looking ahead for the day, we should be having the press conference and the statement from the BOC before the US session begins and by the sign of things, we believe it would be difficult for the BOC to continue to sound hawkish under these circumstances while anything less, would disappoint the markets. Expect a lot of volatility and we believe that if the BOC isnt hawkish, then we should see the USDCAD moving even higher.