The USDCAD pair continues to lounge about at its lows as the pair ranges near the 1.26 region with no specific direction. It is likely to be an important week for the pair with a range of news set to get released from Canada and hence the focus is likely to be firmly on the CAD.
USDCAD In Range
The pair is now firmly under the control of the bulls and we have seen the pair break through the long standing support region of 1.28 as a result. It is likely that the pair would spend the short term in the range between 1.25 and 1.28 and this is going to continue for some time. The CAD has been boosted by some strong data and also from the strong oil prices and hence we believe that it is going to take time for the pair to settle. The dollar has also been choppy at this time due to the geopolitical issues and though the NAFTA agreement still hangs in the balance, we believe that the CAD should do well.
The BOC is scheduled to meet this week and decide on the rate hike and a small part of the market does expect them to hike rates this month. Even if it does not happen this month, it is likely that it will happen in the medium term and that should keep the the CAD buoyant in the medium term, if not the short term. That is why we believe that the pair would continue to trade under pressure during this period and the bears are slated to be in control.
Looking ahead to the rest of the day, we do not have any major news from Canada but we have the retail sales data from the US which is a bit of a surprise that it is coming in on a Monday. But with the geopolitics on the sidelines for now, we should see the market begin to focus back on the economic data.
This article was originally posted on FX Empire