The USDCAD pair ended the week lower on the back of the weakness in the dollar but it was still well within the range as far as this pair was concerned. This shows the underlying weakness in the CAD as well and this ensured that the pair did not break through the lows of the range and was not as volatile as some of the other stronger pairs. It remains to be seen what it would take for the pair to breakout of this tight range.
USDCAD Remains in Range
The USDCAD pair has been caught in the range between 1.26 and 1.28 over the past couple of weeks and though there have been attempts to break through this range on either side during this period, the efforts have been largely unsuccessful. The early part of last week saw the CAD being on the backfoot as the anticipation of a rate hike from the US in December and a hawkish Fed minutes later in the week helped the dollar to sustain its strength. But all of this came to naught later in the week as the minutes disappointed.
Though the FOMC minutes confirmed the rate hike in December, it was not so positive about further rate hikes in December and this led to a weakening of the dollar which led to the USDCAD pair moving towards the lows of its range where it ended for the week. The rising oil prices also helped to add strength to the CAD and this ensured that the dollar was kept under pressure through the rest of the week. The bulls still have some hope left as the lows of the range have not given way as yet.
The upcoming week is likely to be a busy one with the Prelim GDP data from the US and the Yellen testimony coming along during the course of the week. On the other side, we have the employment data and the GDP data from Canada and also a speech from the BOC Governor Poloz also during the course of the week. This promises a lot of volatility and we have to wait and see whether these events would lead to a breakout from the range. Traders would be well advised to wait for the breakout and confirmation before jumping into any trade.
This article was originally posted on FX Empire
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