USDCAD Forecast For week of March 13, 2017
After the breakout period that we saw in the USDCAD pair over the week before, last week was more about the consolidation of the gains and preparing itself for the next move. We saw the pair make a move towards the range highs at around the 1.3500 region and this is the region where the bulls had failed repeatedly over the last few months and this was also the region which began the slide down towards 1.30 the last time as well.
So, the bulls were wary about this region this time around and that is one of the reasons why we have been seeing some consolidation and ranging in this region over the last 2 days of the week. The bulls would want some support from the dollar and the fundamentals underlying the same and it could arrive in the form of the Fed rate hike in the coming week. If the USDCAD bulls fail in this region again, then we will be down to the larger range again and we could see a visit back to the 1.3000 region in due course of time.
Last week saw the release of the employment rates and numbers from both USA and Canada and both of these were much stronger than expected, in both Canada and USA. This improved the outlook for a rate hike in the US in the coming week while for Canada, it was affirmation of an improving economy. Both these basically cancelled out each other and hence we did not see much change in the USDCAD prices following this release.
Looking ahead to the coming week, we have the PPI, CPI and retail sales data from the US and also the all-important FOMC rate announcement and the following statement. The Fed is expected to hike rates and also send out a hawkish statement but these are already priced into the market. So, we may even have a weakening of the USD following the hike and the statement release which the USDCAD bulls need to guard against.