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USD/CAD Monthly Fundamental Forecast – December 2016

By:
Colin First
Published: Dec 2, 2016, 11:15 UTC

USDCAD spent most of the month of November ranging and consolidating as it did not have any specific impetus to move in either direction. The stars of

USD/CAD

USDCAD spent most of the month of November ranging and consolidating as it did not have any specific impetus to move in either direction. The stars of last month were oil and the US elections and considering that both were directly involved in this pair, we would have expected a lot of volatility in this pair. But what we got was cagey trading as the strengths and weaknesses of the dollar was matched by the strengths and weaknesses in the CAD as well and this prevented any specific trend from forming despite the dollar having a great time against the other currencies and the spurt in the oil prices due to the arrival of a deal in the OPEC meeting on November 30 helped the CAD to gain against other currencies.

USDCAD Monthly
USDCAD Monthly

Considering  the bigger picture, we still believe that the pair will have an uptrend pretty soon as we expect the BOC to cut rates sometime in the middle of next year as the effect of higher oil prices begins to wear off. We also expect the US to hike rates this December and next year as well and this is likely to keep the dollar strong. We also believe that with Trump as the President, there may be a redefinition in the trade deals between the US and its neighbours and this is likely to affect Canada as well.

In the coming month, we have the Fed meeting in the middle of the month where they are expected to hike rates which should give strength to the dollar. But with the year end holidays looming ahead, we expect some more consolidation and ranging in this pair which should keep the pair intact above 1.300 while 1.35 will tend to keep a lid on any move upwards. Traders can wait for a correction to load their longs with a stop loss below 1.30.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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