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USD/CAD Fundamental Analysis – week of October 16, 2017

Colin First
Updated

The USDCAD ended lower for the week as the trading was mainly choppy during the course of the week. There was a general expectation in the market that there would be some support for the dollar from the Fed and that this would help the USDCAD pair to break through the 1.2550 region in a clean and clear manner which would then push the pair towards the 1.28 region.

USDCAD Remains Choppy During the Week

But these hopes were belied as the FOMC minutes talked about the usual concerns about the inflation and the economy and failed to say anything about the timeline for the next rate hike, which the market expects to happen in December. The rest of the data for the week from the US was also choppy as the retail sales data came in stronger than expected and the CPI data came in weaker. This continued the trend of the incoming data from the US being choppy and this trend has been there for the past 5 to 6 weeks. This placed the dollar under pressure during the week.

USDCAD Daily
USDCAD Daily

Also, the CAD was well supported through the week by the strong oil prices. Canada did not have any major economic data releases during the course of last week but the strong oil prices helped the CAD to place some additional pressure on the USD and this helped to push the pair through the 1.25 region and it closed the week below this region signifying that the USDCAD pair may make a move towards the lows of the range.

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Looking ahead to the coming week, we do not have much major news from the USA but we have the retail sales and CPI data from Canada later in the week. The market would be watching whether this shows some strength and this could then push the BOC into acting and bringing in another rate hike by the end of the year. Till that time, expect some consolidation and choppy trading in the USDCAD pair.

This article was originally posted on FX Empire

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