USD/CAD Daily Fundamental Forecast – September 28, 2017

The USDCAD pair moved sharply higher during the course of trading yesterday as comments from the BOC Governor was dovish and this set the CAD on the backfoot. We had mentioned his speech in our forecast yesterday and said that the traders need to watch out for his speech to see whether the current bounce would continue or whether we would go back to the downtrend.

USDCAD Pushes Higher on Poloz Comments

The BOC Governor Poloz said that he does not see any timeline for the next rate hike. This comment comes at a time when the market assumed that the BOC would hike one more time this year and this caught the markets by surprise. The hawkish BOC when they raised the rates last time lulled the markets into a false assumption and hence the comments from Poloz was a jolt for the CAD which has since pushed the pair towards the 1.25 region.

We had mentioned in our forecast yesterday that the region between 1.24 and 1.25 is likely to be key for the bounce to continue further and if the pair does manage to break through 1.25 cleanly then we should see the pair moving higher easily towards the 1.2750 region next. It is likely to be a good battle between the bears and the bulls at this point of time for control in the short term. With the year end just 3 months away, for the central bank to say that they do not have any timeline for the rate hike should mean that there would not be any rate hike for this year atleast.

Looking ahead to the rest of the day, we do not have any major news from Canada but we do have the final GDP data from the US which will be watched closely by the market for continuing signs of improvement in the incoming data from the US.