It is a measure of the strength in the CAD and also the strength in the downtrend that even on a day when the dollar managed to stage a good recovery against most of the pairs, it could not make much of a headway against the CAD. On Friday, we had seen a small recovery of sorts in the pair when it bounced from the 1.2060 region to move through the 1.21 region but that was more due to the data from Canada rather than any strength in the dollar.
The employment report from Canada showed some weak numbers and this was not liked by the markets which went about selling the CAD and this helped the USDCAD pair to recover above the 1.21 region and it continued to trade near the 1.2150 region for a large part of the day. But with the BOC hawkish with its rate hike last week and also by leaving the door open for another rate hike later in the year, the BOC has shown that it means business and that is the reason that the dollar could not make much headway during the course of the day.
The fact that Hurricane Irma did not cause much of a damage to the US as was expected helped to support the dollar but this was basically neutralised by the rise in the oil prices as the same event helped to calm down fears of disruption in supply and demand for crude oil. A combination of these events meant that the pair continued to consolidate in a weak manner during the course of the last 24 hours and this is expected to continue in the short term.
Looking ahead to the rest of the day, we do not have any major news from the US or Canada for the day which would mean that we could see some consolidation in the pair on either side of 1.21 with a bearish bias.
This article was originally posted on FX Empire
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