USD/CAD Daily Fundamental Forecast – September 5, 2017

The USDCAD pair spent most of the day yesterday in a tight range which was understandable as it was a holiday in the US yesterday and this led to a drying up of liquidity in the markets and with the lack of drivers in the markets, the pair just wandered about without any specific direction.

USDCAD Under Low Volatility

The oil prices were also locked in a tight range for most of the day yesterday which led to a situation where the CAD could not find strength from anywhere and this also added to the consolidation. The pair continues to look weak in the short and medium term and it trades below the 1.2400 region as of this writing and as we had specified yesterday in our forecast, unless the pair makes it back through 1.2450, we believe that the downtrend is pretty much intact for this pair and we are likely to see the pair continue to be weak.

The dollar is also on the backfoot at this point of time and it is expected to be so for the short term as long as the incoming data is weak. Last week, we got mixed data from the US in the form of strong ADP and GDP data but weak NFP and wages data and a combination of these has not helped to convince the investors and traders as yet. This week will throw more data from the US which could lead to a recovery in the dollar as long as the incoming data is good and so it is better to be cautious.

Looking ahead to the rest of the day, we do not have any major news from Canada but we have a few Fed members making speeches and these are likely to bring in some volatility. Also, with the US traders returning back after their long weekend, we are likely to see more liquidity in the markets.