USDCAD finally managed to move higher during the course of trading yesterday on the back of some dollar strength and a bit more pronounced weakness in the CAD. The dollar and the CAD had been locked in a battle on who would be the stronger one and this battle had led to a stalemate over the past couple of weeks.
USDCAD Moving Higher
This in turn led to some consolidation and range trading during this period between 1.26 and 1.28 and the market was looking for the pair to make a breakout in either direction as there was little to trade within this range. The breakout came about yesterday but so far, the breakout has been slow and steady and not the sudden moves that we normally associate with a strong breakout. That is why it is important to wait and see whether this breakout would finally hold.
The strength in the dollar was accentuated by the troubles of the euro as Germany comes to terms with its political issues. The oil prices were also only steady at best and hence they could not support the CAD as they usually do. A combination of these has helped the pair to break through the 1.28 region and look good for more at this point of time.
As we had mentioned in many of our earlier forecasts, the focus of the markets as far as the dollar is concerned is on whether the Fed would hike rates in December or not. Some clarity is likely to emerge on that during this week as we get to see the FOMC minutes and the traders would be looking for any hints on the impending rate hike. If there is any sort of hint or confirmation of the rate hike, then we are likely to see the pair continue to move higher and challenge the 1.30 region in the short term.
This article was originally posted on FX Empire