USD/CAD Daily Fundamental Forecast – October 4, 2017

The USDCAD pair corrected lower yesterday as it found it difficult to break through the 1.25 region in a clean manner. We have been specifying over the past few days that the region between 1.24 and 1.25 is crucial for further upmove in this pair and unless and until this region is passed through cleanly, we have to assume that the downtrend is still intact in this pair.

USDCAD Corrects Lower

Though the oil prices fell slightly during the course of the day yesterday, the CAD did not seem to be affected too much by it as it was all about the dollar yesterday. The dollar weakened across the board due to profit taking from the dollar bulls as the markets await bigger news from the US over the next few days. The Fed had made it clear that they would consider hiking rates only depending on the incoming data and that is why each and every piece of incoming data would be watched very closely.

The market is not yet ready to give up on the CAD though the CAD Governor Poloz had said that he was not sure when the next rate hike would be. The market still believes that if the incoming data from Canada continues to be strong, the BOC would be forced to hike rates in the near future and this though process is likely to lend some support to the CAD in the short and medium term as well.

Looking ahead to the rest of the day, the real business end of the week begins today with the ADP employment data and the non-manufacturing PMI data from the US scheduled to be released in the US session. We do not have any data from Canada that will be released today but the US data should be enough to guarantee a lot of volatility in the markets. Wait for the price action at the 1.25 region and if it manages to hold, we may go in for another price dip.