The USDCAD pair continued to consolidate and trade within a range as the dollar held steady and the market awaits further news later in the day. It is going to be a volatile week for this pair and the next week would also be volatile but beyond that, the market is expected to settle down into some slow trading ahead of the holidays and the new year. It remains to be seen whether the pair would be able to break through its range over the last couple of months and move higher on lower.
USDCAD Awaits Volatility
The pair now trades near the lows of its range as the dollar remains steady and looks forward to the passage of the tax reform bill through the Senate over the next few days. There has been a slight delay in the passage of the bill but so far, the impact of that has been minimal. Yesterday, we saw the USDCAD pair bounce higher off the lows of the range but the bounce is more of a correction and a bounce off support rather than it being related to anything fundamental.
The volatility is likely to pick up from today as we have the ADP employment data from the US later, just before the beginning of the US session. We also have the rate announcement and the statement from the BOC as well. Though the BOC is known to be one of the most hawkish central banks around the globe, even they would not be in a position at this point of time to hike rates in Canada. So, we can expect a hold decision as far as the rates are concerned.
On the other hand, the statement is likely to be watched closely to understand what the BOC thinks about the economy and also to see whether there are any hints of the thinking of the BOC as far as the next rate hike is concerned. It is generally believed that the BOC would not hike rates for the next few months atleast but the data over the last week has been strong and it remains to be seen whether that has forced the BOC to become hawkish on rate hikes once again.
This article was originally posted on FX Empire
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