Yahoo Finance USD/CAD Fundamental Analysis – week of January 15, 2018
It was a volatile trading week in the USDCAD pair during the course of the past week. The improvement in the strength of the dollar, the incoming data from the US and Canada and the oil prices were all factors in the volatility seen in the pair during this period but even through all that, it was clear that the bears were in total control in this pair and hence that where the pair ended for the week as well.
USDCAD In Bearish Grip
We had mentioned the same during the course of the week and even when the pair was moving higher, we had advised our traders to use the bounce in this pair as an opportunity to go short as we felt that the pair would eventually move lower and this is what happened during the week. The week saw a lot of fundamental developments and economic data with the first part of the week seeing some strong Canadian data which pointed to the possibility that there would be a rate hike from the BOC in the next month or so. Then this was followed by a period of strength from the dollar and a period of weak data from Canada which saw the building permits data come in dismally lower than expected.
This pushed the pair higher and through the 1.25 region and with reports that the US could pull out of the NAFTA talks coming in as well, we saw the bulls take control for a brief while and push the pair towards the 1.26 region. We felt that this move is likely to be reversed and we mentioned so and as the oil prices continued higher and lent support to the CAD and as the dollar weakened towards the end of the week, we saw the pair move lower during this period and it closed the week below the 1.25 region.
Looking ahead to the coming week, we do not have any major data from the US while we have the rate announcement and statement from the BOC. This should give a glimpse of what the BOC is thinking of, as far as the future rate hikes are concerned and if they sound hawkish, then it would increase the hopes of a rate hike in the coming month and this would push the pair even lower towards the 1.23 region during the coming week. Traders can again use any bounce in this pair as an opportunity to go short as the bears seem to be in control.
This article was originally posted on FX Empire
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