USD/CAD Daily Fundamental Forecast – September 20, 2017

As we had mentioned in our forecast yesterday, the USDCAD pair continues to trade between 1.22 and 1.23 in a manner of consolidation ahead of the FOMC later in the day today. This is a small bounce from the support region around 1.2050 and so far, this bounce has yielded 200 pips and it remains to be seen whether we will get more from this bounce in the short term.

USDCAD Waits on FOMC

The focus of the market is clearly on the FOMC today as the Fed has a range of choices before it and it remains to be seen what it chooses. We have seen the dollar getting steady over the last few days as it awaits the news and we are seeing some consolidation all over the market ahead of this announcement. The market hopes that the FOMC would say something that would be hawkish and help in the recovery of the dollar.

The incoming data from the US over the last few weeks has been choppy at best and that ties up the hands of the Fed a bit but still the market hopes that the Fed would signal a hike in December and keep that option open just as yet. It remains to be seen whether it can manage to do that but even if not, it would like to keep the door open in case there is a turn around in the data over the next few weeks.

There are no economic news scheduled to be released from Canada over the course of the day and this puts the attention firmly on the FOMC. If the Fed does turn out to be as hawkish as the market expects, then the first target for this pair would be around the 1.25 region which would then serve as a strong resistance as the market awaits further recovery in the dollar. It is likely to be a very volatile time later tonight and traders would be well advised to wait on the sidelines and watch.