The USDCAD dropped lower on Friday following the release of the employment reports from both the US and Canada as well. While the US data was mainly steady which did not bring about much change in the value of the dollar, the Canadian data came out stronger and this helped the CAD to gain against the dollar. There has been a small bounce since the drop lower and the pair trades above the 1.2750 region as of this writing.
USDCAD Corrects on Strong Canadian Data
The NFP data from the US came in weaker than expectations for this month. But the data from the previous month was revised higher and this compensated for the drop this month and helped to keep the dollar steady across the board. This also kept the option open for the Fed to hike rates in December and this is what has been helping to encourage the bulls over the past few weeks and continues to keep the dollar steady.
On the other hand, the BOC has more or less ruled out any rate hike in the near future and this had led the pair to bounce from the lows of the range and move higher towards the 1.28 region over the last week or so. But in this scenario, the employment data from Canada came in much stronger than expected on Friday and this has led to some of the gains being pared in USDCAD. We believe that the dollar is likely to get stronger in the short to medium term which should mean that this move lower is just a correction of the bounce higher and once the dollar strength begins to take shape, we should see the pair beginning to move higher towards the 1.30 region.
Looking ahead to the rest of the day, we do not have any major economic news from the US or Canadian region for the day and hence we should see some consolidation on either side of the 1.28 region during the course of the day as the market begins a new week.
This article was originally posted on FX Empire
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