The USDCAD pair finally managed to break higher through the 1.25 region during the course of trading yesterday after chopping around this region over the last few days. It remains to be seen whether the bulls would be able to hold the pair above this region for today as well and if they do manage to do that, we could say that the downtrend is over for now and begin to look for targets on the upside.
USDCAD Waits for Data
The weakness in the CAD was mainly due to the trade balance report which came in slightly weaker than expected. Though it was not very bad, this was the first such report after the BOC hiked its rates and this made the market wonder on whether the other pieces of forthcoming data would also turn out to be weak and also made the market wonder about future rate hikes from the BOC as well. This kind of risk and uncertainty is not liked by the markets and hence the CAD weakened and the pair broke higher.
The bullish run in the pair was also helped by the fact that the dollar strengthened across the board yesterday. The dollar was helped by some strong factory orders data which led to hopes that the wages data which is due for release would also turn out to be strong when it gets released later in the day today. This led to the next leg of the bull run in the dollar which further fuelled the upmove.
But all of this comes down to today when the employment data from both the US and Canada would be released later in the day. Depending on how the data comes out, we could see a battle between the bears and the bulls which would determine the next short term direction as far as the pair is concerned.
This article was originally posted on FX Empire
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