USD/CAD Daily Fundamental Forecast – September 8, 2017

The USDCAD pair continued to move lower as the effect of the surprise rate hike from the BOC seemed to have the pair within its grip and this helped to continue the downtrend in this pair. It is believed that this downtrend is likely to last for some more time as the fundamentals continue to be loaded in favor of the Canadian economy in the short and medium term but we might be in for periods of correction in the downtrend.

USDCAD Looking Towards 1.20

The BOC surprised the markets with its rate hike and continued to be upbeat about the economy and left the door open for a rate hike later in the year as well. The BOC could not have been more hawkish than this and this was rightfully followed by a quick and large move downwards in the pair and the move continues as of this writing. The pair trades below the 1.21 region and it is likely to move towards the 1.20 region in the short term as the dollar weakens across the board.

The combination of dollar weakness and the CAD strength has been too much for this pair and that is why we have been seeing this strong downtrend during this period with little by way of correction. The turnaround has been swift and deadly and the BOC has to be appreciated for keeping themselves ahead of the market and also being decisive when it needed to be. This has helped the Canadian economy and also helped the market to trade the actual fundamentals rather than speculate.

Looking ahead to the rest of the day, we have the employment data from Canada for today and that is also likely to bring a lot of volatility in the pair as it is an important data point and hence will give a hint of the Canadian economic strength. If the data comes out strong, it will push the USDCAD pair towards 1.20 where we could see some consolidation.