USD/CAD Daily Fundamental Forecast – September 1, 2017

The USDCAD got back to its downtrend as the fundamentals against the US and for Canada were simply so strong that even a strong dollar and even a strong incoming data from the US could not do much to reverse the strong downtrend that this pair seems to be in. The market now looks forward to the employment report on Friday to see if the downtrend can continue further.

USDCAD Moving Lower

The pair is now back to its range lows in the mid 1.24s and the NFP data from the US today is likely to determine the next direction for this pair. Since the beginning of the week, we have seen some choppy action in the pair as it had moved down to the range lows, then we saw a bounce through the 1.26 region and then we have seen a fall again back to the range lows.

The trigger for the latest round of bearishness in the pair is due to the fact that the GDP data from Canada came in at a much stronger than expected value of 0.3% when the expected value was only 0.1%. This coupled with the weakness in the dollar has pushed the pair back to its range lows. We also saw the oil prices moving higher, as the demand for crude oil is expected to pick up in the short term, and the turn around for the pair has been complete.

The employment report from the US for today is likely to be crucial as the market still hopes to see a rate hike later in the year. A weak data of less than 200K is likely to put those hopes to rest and this would leave the dollar fully exposed to weakness once again. If that happens, we could see the range lows being broken in the USDCAD pair and then we should be seeing 1.23 and lower pretty soon.