USD/CAD Daily Fundamental Forecast – January 31, 2017
USD/CAD, as we had mentioned yesterday, continued to trade and consolidate within a tight range as the weakness in one was cancelled out by the weakness in the other currency as well. The US dollar suffered over the past couple of days due to a slew of changes made to the immigration rules and also trade agreements between the US and other countries. We saw the immigration rules being changed to restrict people from specific 7 Muslim countries entering into the US and we also saw the US being moved out of the TPP agreement. These were part of the campaign promises given by Trump and his team and they have begun to follow through on those though these moves are disliked by many, Americans and non-Americans as well.
The change in immigration rules is expected to affect the economies of the US and the other countries and we are also looking at a situation where these countries could retaliate against the US with similar measures. Also, with changes to trade agreements, we could be seeing the exports and imports of the US and other countries also being affected and this is likely to affect the economic balance of the world. As a neighbouring country of the US, Canada is likely to be most affected by these moves and thats why we have been seeing the CAD also on the backfoot over the past 2 days. The support region around 1.3100 has managed to hold good so far but the pair is expected to continue to trade weakly for today.
Looking ahead to today, we have the Canadian GDP data that will be released before the NY session and this will be watched closely to look for any signs of a weakening economy that will boost the chances of a rate cut by the BOC in the coming months. Trade carefully during these volatile times and do trade with strict stop losses.