USD/CAD Fundamental Analysis – week of November 28, 2016

USDCAD had a tight week of ranging and consolidation as the pair saw the strength of the dollar being largely cancelled out by the strength in the CAD as well. The pair did dip towards 1.3380 and then had a high close to 1.36 during the course of the week due to fluctuating strengths but both these moves were quickly reversed as the buyers and sellers continued to engage in a tight tussle for control.

The dollar strength has been in the markets for the past 2-3 weeks ever since the end of the elections and the reasons for the same has been well documented. The CAD strength has been born out of continuing good data from the Canadian region and also the fact that oil prices continue to remain buoyant over the last week as the OPEC meeting, scheduled to be held on November 30, is expected to lead to a deal between the oil producers on production cuts. The talks are already going on and the reports so far have indicated an inclination among the producers on the need to cut production and this has made the market hopeful of a deal being worked out. This has kept the oil prices high and this in turn has added to the CAD strength and kept the USDCAD pair in check.

Looking ahead to the coming week, we have the OPEC meeting on November 30 and if a deal is worked out during the meeting and is announced, we can expect the next bull run in the oil prices which should carry the prices past $49 and on to the mid 50s. This could bring the USDCAD pair under pressure and could lead to a correction towards 1.3400 and maybe even 1.3300. We also have the NFP employment report from the US which should tell us whether the economy of the US continues to remain strong and if it is, then we could hope for further rate hikes in 2017 which should add to the USD strength. All in all, a volatile week ahead.