USD/CAD Daily Fundamental Forecast
USDCAD spent the last 24 hours basically wandering up and down with no specific direction as it tries to consolidate its gains. We had mentioned in our forecast yesterday that with the lack of news over the last 24 hours, it is likely that the pair consolidates between 1.34 and 1.35 and thats what we have been seeing as well. The markets seems to be in a wait and watch mode as far as the US dollar is concerned and this is clearly reflected in the lack of interest in buying or selling in this pair, which has in turn led to a period of ranging and consolidation.
USDCAD Continues to Consolidate
The market awaits the storm that is brewing in the US and which is expected to hit NY tomorrow. This is as far as the real storm/blizzard is concerned. But what should worry the markets and the traders even more, atleast in the other parts of the world, is the slew of data that is to be released from the US tomorrow.
We have the CPI data, the retail sales data and to top it all off, we have the FOMC rate announcement and the statement. The markets have already priced in a rate hike for tomorrow and that is one of the reasons why we see the USDCAD continue to cling on to its range highs. The market has also priced in a hawkish rate statement as well and this is where the uncertainty comes in. We do not know how much hawkishness is enough for the dollar bulls and thats why it becomes difficult to gauge how the USDCAD pair will move post the release.
If the statement is hawkish as expected, we could see the next leg of the dollar strength which should help the USDCAD bulls to finally mount a serious challenge to the sells that are crowded around the 1.3500 region. But if the statement is not as hawkish as expected, then we could see the dollar correct and we should then see the USDCAD slide back into range.
Looking ahead to today, we only have the PPI data from the US which is unlikely to cause much volatility and so we can safely expect the consolidation between the 1.34 and the 1.35 region to continue.