There hasnt been much happening in this pair over the last week or so as the prices have been caught between the 1.28 and the 1.30 regions for most of the time. It was more of the same yesterday and it remains to be seen whether there is going to be any change today as some volatility is expected.
USDCAD Moving In Range
The pair has been caught in a tight ranging trading over the last few weeks as the strength of the dollar and the CAD have been competing with each other to gain the upper hand. the dollar bulls have been able to make some headway over the last week or so mainly due to the fact that there is growing anticipation in the trading circles which show that the Fed is looking to hike rates in March.
Also the strong incoming data from the US over the last few weeks has also been supportive of the dollar and raises the possibility of 4 rate hikes during the course of the year which would be hawkish for the dollar. On the other hand, the CAD has been faced with choppy incoming data making life difficult for the BOC and also the bulls as well. The BOC would wish to see some strong data so that they would be able to go along in their path of quick rate hikes but the US seems to have trumped Canada in this aspect and that is why we have been seeing the CAD on the backfoot.
We hope that the scenario, as far as consolidation and ranging is concerned, changes in the coming days as we have the inflation data from the US later in the day and we also have the BOC Governor Poloz making a speech as well. He is generally hawkish on the CAD but it remains to be seen whether he would continue to be so today as well.
This article was originally posted on FX Empire
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