USD/CAD Fundamental Analysis – week of April 24, 2017

USDCAD had a pretty strong week after beginning the week well within range and looking to consolidate. It was only towards the middle and the end of the week that the pair finally managed to break through the difficult resistance around the 1.34 region and was able to make some progress towards the crucial 1.35 region. We have been mentioning many times over the last several weeks that the region around 1.35 is likely to be very crucial as it has repeatedly held up the progress of the pair over the last several months and the bulls have been unable to break through, despite all their efforts.

USDCAD In Important Region

The pair was helped in its rally by the underlying strength in the US dollar which was boosted by reports that the Trump administration was still very keen on the corporate tax cut plan and that it is likely to be implemented during 2017 itself. In fact, if reports from Friday are to go by, we are likely to see Trump announce the important points in the new tax plan next week and these reports helped to bring in some strong buying in the dollar which helped to boost the USDCAD.

The other important fundamental point of note was the weakening in the oil prices over the last week. After looking pretty strong in the early part of the week, the oil prices began to fall after the inventory data did not show as much as a drop as was expected and this, along with doubts on whether the oil producers would continue the production cut deal beyond mid-year, saw the oil prices fall and this was negative for the CAD. This helped to push the USDCAD prices towards 1.35 where it sits to close the week.

Looking ahead to the coming week, we have the retail sales data from Canada and the GDP data as well and we have the advance GDP data from the US and these news events should keep the traders busy. As mentioned above, the USDCAD is in a region where heavy selling has been seen everytime over the last few months. A clean break of the region could lead to a big move towards 1.40 but traders should watch out for consolidation and ranging.