The USDCAD pair broke through higher during the course of trading yesterday as the market headlines was dominated by the stock market crash that was seen all around the globe and that seems to be continuing today as well. The US stock indices also had a large fall which led to some more panic selling and this sell off seemed to help the dollar which managed to gain ground all around the markets yesterday.
USDCAD Pushes Through 1.25
The dollar gained yesterday as it usually gains whenever the stock markets fall. At these times, the investors tend to withdraw their profits and their funds from the stock markets and other risky assets and they push them into safer assets like the gold, silver and the dollar as well. This is one of the major reasons why the dollar gained in strength yesterday despite there being no specific fundamental or economic reasons to do so. Of course, the anticipation over the impending rate hikes could also be attributed to the strength of the dollar.
On the other hand, the CAD is on the backfoot due to the weakness in the oil prices which in turn seem to have been impacted by the rising dollar. A combination of these events helped the USDCAD pair to break higher and push through the 1.25 region to close the day and the pair continues to trade above that region as of this writing. It remains to be seen whether it would be able to hold its rise and we believe that it would do so. This would indicate that the bulls are in control and would point to further gains ahead.
Looking ahead to the rest of the day, we do not have any major news from the US but we have the trade balance data from Canada. The 1.25 price region is likely to determine who takes control of this pair and so far, the bulls seem to have the upper hand.
This article was originally posted on FX Empire
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