The USDCAD pair rose higher yesterday on the back of some dollar strength. This dollar strength has been existing in the markets ever since the middle of last week as anticipation grows over the next rate hike from the Fed. This is likely to keep the dollar buoyed during the short term though it is likely that it would be hit hard by the trade flows and positioning as we enter the last part of this month.
USDCAD Caught in Range
It is that time of the month when the price action and trends go out of the window and it is all about the trade flows and positioning ahead of the new month. We have rollovers and option expiries which tend to dominate the price action and this is likely to be the case over the next couple of days as well. That is why it is important for the traders not to be carried away by all the price action over the next couple of days and focus on the overall trends. The dollar has been strengthening and if the data from the US continues to be strong, we are likely to see this strength continue in the short term.
Also, we have been seeing the prices of oil correcting lower, during the last few days, in what is seen as the first signs of weakness in the oil markets. This has also been affecting the CAD which has weakened and this has helped the pair to climb towards the 1.24 region and it remains to be seen whether the bull run would be strong enough to break through. The dollar has also been buoyed by the anticipation of further rate hikes from the Fed more than the 3 that the market expects, in case the incoming economic data continues to be strong.
Looking ahead to the rest of the day, we do not have any major news from the US or Canada for the day and so we can expect some more consolidation between the 1.23 and 1.24 regions but the fact that we are near the month end could mean that we could be in for some volatility.
This article was originally posted on FX Empire
More From FXEMPIRE:
- Daily Grains Analysis – Wheat and Corn Surge, Soybeans Trail
- USD/CAD Daily Fundamental Forecast – January 30, 2018
- Tuesday Support and Resistance Levels – January 30, 2018
- Bitcoin Investors May Be in for a Harsh Winter
- Natural Gas Price Fundamental Daily Forecast – Market Approaching Trigger Point for Acceleration to Upside
- Technical Checks For EUR/USD, GBP/USD, USD/CAD & NZD/USD: 30.01.2018