The USDCAD pair made an attempt to move higher during the course of trading yesterday but could not make much headway. The dollar bulls would have expected to make much better progress on the back of the hawkish Fed on the previous day but it looks as though the dollar is just not yet in a position to make much of a move at this point of time and continues to remain on the backfoot.
USDCAD Likely to be Volatile
The USDCAD pair made a move through the 1.23 region and moved above 1.2350 but that is as far as it got during the first half of the day as the second half was dominated by the weakness in the dollar. This was a bit surprising considering the fact that the Fed did what it could to support the dollar. They had kept the door firmly open for a rate hike in December and this is almost all that the market needed. It did lead to a rally in the dollar for sometime after the announcement.
But over the last 24 hours, that rally seems to be slowly but steadily fizzling out as the other currencies begin to gain ground. We had mentioned that the CAD is likely to be equally bullish and hence the bounce in the USDCAD pair cannot be expected to last for long and that is what we are seeing now. The oil prices have also been steadily supportive of the CAD and a combination of these has helped to keep the USDCAD under pressure as it trades below 1.23 as of this writing.
Today, we have a bunch of important news from Canada in the form of retail sales and CPI which is likely to bring in a lot of volatility in the pair, all of the bearish kind if the data comes out stronger. This could be a trigger for a move back to the lows of the range in the coming days.
This article was originally posted on FX Empire
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