USD/CAD Fundamental Analysis – week of April 10, 2017
USD/CAD continues to trade within a tight range unable to make a break in either direction. The fact that the bulls have not been able to make much progress is quite understandable as the prices are quire near the 1.35 region which has proved to be a very strong resistance for quite some time now and the bulls have failed in this region several times over the past few months. So, the buyers are quite wary of investing in the pair close to the range highs.
USD/CAD Continues to Consolidate
The fact that the pair has not fallen down suggests that the trend is still up. Last week, we saw the oil prices make some strong progress and generally, when such things happen, the CAD grows in strength as the Canadian economy depends a lot on the oil prices. In such cases, we should have seen the pair fall by a lot but what we saw was some more ranging and some more consolidation.
It could be said that the strength of the CAD was offset by the strength of the dollar on the back of some strong ADP employment report and low unemployment rate and also due to the increase in global fears and risks following the escalation of the conflict in Syria due to intervention by the US. This led to a flight to safety for the funds around the world and one of the beneficiaries of that has been the dollar. This has helped to balance the USD/CAD pair and this is one of the reasons for the ranging of the pair despite a decent employment report from Canada last week.
Looking ahead to the coming week, we have the retail sales, PPI and CPI data from the US and also Yellen making a speech but with the dollar expected to hold steady in the short term and the oil prices also expected to be well bid, we should see the pair continue to consolidate and range over the short term.