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USD/CAD Daily Fundamental Forecast – August 23, 2017

USDCAD fell hard, as was widely expected, as the Canadian dollar continued to gain in strength and the downtrend in this pair has resumed once again. It is going to be an uphill task for the bulls to bring in any sort of buying in the middle of such a large downtrend and hence we expect this to continue in this short and medium term as well.

 

USDCAD Resumes Downtrend

The trigger for the fall yesterday was the retail sales data from Canada but we had been harping on the downtrend resuming for the past couple of weeks based on the fundamentals that we have been seeing in the markets. The incoming data and the hawkish BOC are too much of a combination for the poor dollar, which i clearly on the backfoot across the board due to its own troubles with the economic data and also with the geopolitical troubles of Trump and his team.

USDCAD Hourly
USDCAD Hourly

The retail sales data from Canada came in at a much stronger than expected value of 0.7% while the expected value was only 0%. This confirmed the strength in the Canadian economy and also sent out a message on why the market needs to be long on the CAD. The BOC would also have been very happy to see this data, especially after their hawkish hike in recent times and this data may lay the ground for further hikes in the short term which are once again going to supportive of CAD. This led to a drop in the pair towards the 1.25 region and though it has bounced from there, we still believe that the downtrend is intact.

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Looking ahead to the rest of the day, we have the oil inventory data from the US but this should have little impact on the prices, due to the very strong downtrend that we are seeing in the USDCAD pair.

This article was originally posted on FX Empire

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