USD/CAD Daily Fundamental Forecast - October 6, 2016

Like EURUSD, the USDCAD pair also chose to have a tight rangy day today with not much of action. It tried to break through the support at 1.3180 during the first half of the day but the buyers were too many and so it bounced and tried breaking through the small resistance at 1.3220 but it was that kind of a day when even small resistances and supports were enough to hold back the action in the pair. Towards the US session, the trade balance from Canada was released and it came in better than expected and this saw the pair again make its way towards the support at 1.3180. The pair continues to sit at 1.3183 as we write this after making a brief trip again towards 1.3220 based on some US data which wasnt enough to make the pair break through resistance.

As specified yesterday in our forecast, we expect some continued consolidation in the pair as it digests its gains and action of recent days and we could see some more action on Friday when the employment data from both Canada and US get released on the same day and same time. As we have been saying repeatedly, we continue to be bullish on this pair and we expect the pair to make its way towards 1.3280 and then 1.35 and then 1.40 eventually. So, any correction in this pair towards the low 1.3000s or even slightly lower should be viewed as opportunities for traders to go long on this pair.
For today, there is no major news to be released from Canada and hence we expect a repeat of the same action from yesterday as the market awaits the news tomorrow. We expect the Canadian economy to get weak in the coming weeks and months as the effect of low oil prices continue to affect the economy. We could also be looking at a cut in interest rates in Canada over the coming months and this could really boost this pair. Due to technical and fundamental reasons, we have been long on this pair and continue to be bullish.

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