USD/CAD Daily Fundamental Forecast – September 6, 2017

There would be no shortage of volatility in the USDCAD pair for today as we have a lot of news from Canada and a little from the US as well. For the past few days, the pair has been trading below the 1.24 region with no specific region and the longer that it has been in consolidation, the more risky and dangerous that it can get and thats why we have been advising our users to stay away from the pair for now and make sure that the downtrend is continuing.

USDCAD Likely to be Volatile

We believe that the downtrend is still intact but there is every chance that the pair might stroke back pretty quickly. The USDCAD pair has broken through the 1.2450 region and moved lower and this would have normally led to a quick and sharp move downwards on the break of such an important support but the follow through has not been great so far. Also, we are finding the selling in the dollar to be a bit overstretched at the moment and the dollar bears might want to let the dollar get some relief so that they can sell higher.

A combination of these factors could support the dollar and lead to a bounce in the pair but that would be dependent on the incoming data. We have been seeing that the oil prices have been steadily moving higher ever since the beginning of the week and this has been lending support to the CAD as well. So, still the fundamentals are very much in favor of the downtrend to continue but we believe that we might just get a kind of relief rally in the pair before we start moving lower again in the short term.

We have the trade balance from Canada later in the day and also the more important rate announcement and statement from the BOC which will be watched closely to see if the BOC continues to be hawkish and also to see for any hints in the timeline for the next rate hike from the BOC. If they continue to be hawkish, then we should be in on the next leg of the downtrend.