USD/CAD Forecast October 11, 2017, Technical Analysis

The US dollar fell against the Canadian dollar during the session on Tuesday, as we have now broken below the 1.25 handle. A lot of this would’ve been based upon the oil markets rallying significantly during the day, which of course is good for the Canadian dollar. However, we get the FOMC Meeting Minutes coming out today, and that of course offers some insight as to what the Federal Reserve may do next. While many people believe that there will be interest rate hikes towards the end of the year, it’s likely that the tone of the meeting minutes will be important. After all, the market should continue to pay attention to how serious the Federal Reserve is about raising hikes, and more importantly, if we can glean how many times they are going to do it.
On the other side of the equation is the Bank of Canada, which has recently suggested that rate hikes are not “automatic”, so therefore we need to keep in mind that perhaps the Canadian dollar is likely to be sensitive to the Federal Reserve more than anything else. The Bank of Canada that doesn’t look likely to raise interest rates as rapidly as people had thought after the surprise hike. In fact, it looks likely that the Canadians may be “one and done”, and therefore I think that their interest rate hike had more to do about the housing bubble in Canada more than anything else. While the economy has picked up a little bit, the reality is that they could find themselves at the mercy of the housing crisis like the United States had during 2008. With this in mind, I think there is a chance that the US dollar continues to strengthen, but if we were to break down below the 1.24 level, then I think we need to go down to the 1.20 level to find even more support.