USD/CAD Fundamental Analysis – week of February 27, 2017

USDCAD had an up and down week as the bulls and bears continued to fight against each other so that they can gain control over the pair but the ultimate result so far has been that neither of these groups have been able to take control and so the pair has been ranging and consolidating over the past few weeks and thats what it did last week as well.

Will It or Wont it?

Last week saw the release of the retail sales data from Canada and this came out much below expectations and gave a chance for the bulls to push the pair higher. They did take that chance and pushed the pair above 1.3100 and towards 1.32. But the FOMC minutes were released and this turned out to be a disappointment for the markets.

The markets were expecting the minutes to say specifically on when the rate hikes were to be and in fact, they were hopeful of getting pointers that the first rate hike for the year could be as early as March but the minutes chose to tread the middle path and except for saying that it would come pretty soon, it didnt commit itself to any timeline as far as the rate hikes are concerned.

This was disappointing for the dollar bulls and they pushed the pair back through 1.3100 and thats where it trades to close the week. The region between 1.3000-1.3060 has repeatedly shown up to be a tough region for the bears to break through and we believe that this region will be the key in the battle between the bulls and the bears. A break through this region would put the pair in control of the bears and unless this happens, the bulls will be in control.

Looking ahead to the coming week, we have a host of data on either side with the Prelim GDP, consumer confidence and durable goods data from the US and the BOC rate statement and rate from Canada. All these should promise for a volatile week ahead.