USD/CAD Daily Fundamental Forecast – April 04, 2017
USDCAD had a good day yesterday as it tested the highs of the range and continues to trade just below that as of this writing. We had been mentioned in our past few forecasts that the pair is likely to be stuck between the range of 1.33 and 1.34 for the time being and that is what we saw yesterday as well. The market is generally in a waiting mode, as it awaits a lot of data in the coming days of the week and as the traders position themselves for the upcoming data, we see that the market would be in a consolidation and ranging phase.
USDCAD Still Within Range
Yesterday, we saw the oil prices weaken a bit and below $51 and that is one of the main reasons for the weakening of the CAD as well. The Canadian economy depends a lot on the prices of oil and so if the oil prices increase, the CAD will strengthen and vice versa. Based on that, the CAD weakened yesterday on the back of weak oil prices and this pushed the USDCAD pair above 1.3350 and it made a move towards the recent range high of 1.34.
Here, it was met with a lot of selling, which is something that was always expected and so it trades just below that awaiting data and events further on in the day. The markets have been dull over the last 24 hours as it is the first trading day of the month and the volatility is expected to pick up today and even further in the coming days of the week as a slew of data is expected to hit the headlines.
Looking ahead to the rest of the day, we have the Trade Balance data from Canada and this is an important economic parameter for Canada especially as a lot of its trade is with the US and with Trump at the head, it remains to be seen how the exports and imports and hence the trade balance is affected. This could bring in some volatility and a break of 1.34 is likely to target 1.35.