The USDCAD pair tried to move higher yesterday on the back of some dollar strength but it was beaten back and now it trades just above the support region at 1.25 as of this writing. It looks as though the pair might continue to consolidate and range for some more time as it awaits more data further ahead in the week which should then help the traders to decide on the short term direction.
USDCAD Moving In Tight Range
The dollar gained some strength during trading yesterday as the incoming data in the form of manufacturing PMI turned out to be stronger than expected. This was before the FOMC minutes came in and this helped the dollar to hold steady. The minutes came in and it became clear that the Fed members favored the gradual hiking of rates in due course of time and this was viewed as hawkish by the traders. This helped the dollar even further which caused the pair to move higher towards the 1.2550 region.
But later in the evening, the oil prices began to gain in strength even further on the back of supply concerns and this caused the prices to move through the $62 region. This helped the CAD to gain in strength as much of the Canadian economy depends on the oil prices. This caused the pair to make a turnaround and move lower where it continues to range at this time.
Looking ahead to the rest of the day, we have the ADP employment report from the US and no data from Canada. The employment report will be viewed as an important indicator of how the NFP data would come in and hence a strong reading in this data should help the dollar even further and move the USDCAD move higher again.
This article was originally posted on FX Empire
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