USDCAD continued its fall on Friday as the key economic data from the US pushed the dollar further on to its backfoot and it looks as though the downtrend is here to stay, as far as this pair is concerned. The CAD is also moving from strength to strength, as indicated by the economic data from Canada and hence, we can safely expect that any bounce in this pair is likely to be met with a lot of selling in the short and medium term.
USDCAD Set on Downtrend
On Friday, we had the CPI and retail sales data from the US. It was a much awaited data as far as the markets were concerned, due to the general disappointment caused by the speeches of Yellen which failed to enthuse the markets. So, the markets would have hoped that the retail sales and the CPI data would continue the good economic trend triggered by the strong NFP data but they were set for some disappointment as both of these data missed the expectations by a long way.
With the Fed making it clear that it will look to hike rates only based on the incoming data, any sort of weak data would only serve to push back the timing of the rate hike and this is likely to put the dollar on the backfoot. With countries like Canada and the UK set to reverse their rate policy, it would only get more and more difficult for the dollar bulls in the short and medium term when they are up against the other currencies.
Looking ahead to the rest of the day, we do not have any major economic data from the US or Canada during the rest of the day and so we can safely expect some consolidation and ranging in the USDCAD pair, especially as today is the first day of the weekend.
This article was originally posted on FX Empire
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