The pair has been moving higher during the course of trading over the last week. Though the overall direction was up, the trading was quite choppy during the week as the traders were caught in 2 minds on whether the move up was a correction of the downtrend or a full fledged change in trend. To be right, it has to be said that the answer to this question is still not yet known and it is possible that we will get the answer only in the coming week when a slew of data is scheduled for release.
USDCAD Rises Through the Week
The biggest piece of news over the last week, as far as the USDCAD pair was concerned came from Canada where the BOC Governor Poloz said that he wasnt looking at a timeline for the next rate hike. These comments came while most of the market believes that there would be another rate hike from the BOC by the end of the year. The market was a bit taken aback from such comments from Poloz and this was followed by a 100 pip move which helped the pair to move towards 1.25 during the course of the week.
The move would have been bigger during the week when the dollar was in rebound but not for the fact that the oil prices rose steadily during the course of the week. This helped to lend some support to the CAD which has now left the pair at the crossroads in the 1.25 region. We are likely to see the trend for the short term to be determined in the coming week when there is a range of data from the US and Canada that will be released.
This data includes the employment reports from both US and Canada and those will act as large fundamental indicators of the strength of the respective economies. This piece of data would determine whether there would be a rate hike later in the year from the Fed and the BOC. As mentioned above, the 1.25 region is a region of large selling and if this is broken through clearly, we should see the pair moving towards the 1.28 region while a failure of the employment report from the US is likely to take the pair back towards the lows of the range at around 1.2060.
This article was originally posted on FX Empire
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