The USDCAD pair had a strong week as it moved higher on the back of dollar strength and also on the CAD weakness as well. The doollar strength waned towards the end of the week but that did not seem to have much of an impact on the pair and it closed the week near the highs of its range and this should have the bulls licking their lips in anticipation in the coming week.
The dollar was buoyed during the first half of the week by comments from the new Fed Chief Powell who was very hawkish about the US economy which has given raise to the possibility that there could be more than 3 rate hikes during the course of the year. The market was not expecting that and this led to dollar buying which pushed the pair through the 1.28 region and towards the 1.29 region as well.
Towards the end of the week, the dollar strength got worn down due to the tariffs on steel and aluminium from the US administration but that did not have much of an impact on the pair which continued to trade near the highs. The weakening that was seen in the oil prices did little to help the CAD and this was another reason for the weakness in the pair despite the fact that the incoming data from Canada was on expected lines.
The coming week is likely to be highly volatile for the pair with a slew of data from both sides of the border. While we have the NFP and the ADP data from the US, we will be having employment data and the GDP data from Canada as well. These will be important data point for the respective central banks to make a decision on their next and future rate hikes and hence would be viewed with care by the markets. The pair is also near a strong resistance in the mid 1.29 region and hence a breakout would lead the pair much higher while weak data from the US could cause the pair to fall back into range.
This article was originally posted on FX Empire
More From FXEMPIRE:
- USD/CAD Fundamental Analysis – week of March 5, 2018
- Price of Gold Fundamental Weekly Forecast – Weak Dollar, Stocks Should Underpin Prices
- How to Buy Bitcoin with Cash?
- Tariff Impact Stretches to Copper, Gold, Crude Oil
- Treasury Yields Pop on Fear of Trade War, More Robust Inflation
- Flight-to-Safety Buying Crushes USD/JPY