Yahoo Finance USD/CAD Fundamental Analysis – week of May 21, 2018
The USDCAD moved higher towards the end of the week after having spent much of the past week chopping around the 1.28 region. The region around 1.28 had seen a lot of activity over the past week as the bulls and the bears in the pair fought it out in that region for control of the pair. It was a strong region of support and this was clear by the consolidation and the ranging that we saw in that region.
USDCAD Looking Higher
But towards the end of the week, we saw the incoming data from Canada turn out to be weaker than what was originally expected and this led the pair higher. The pair had been under pressure till then despite the strength in the dollar that was seen all across the markets. Though the dollar managed to rise against various currencies, it could not do so against the CAD due to the rising oil price, which usually helps the CAD to move higher, and also due to the increased anticipation that the BOC would be looking to hike rates.
The BOC is one of the most hawkish central banks around and with the incoming data till last week being strong, there was a lot of expectation of some quick rate hikes. But the inflation and retail sales data from Canada on Friday turned out to be weaker than expected and this put paid to the hopes of a rate hike anytime soon.
Looking ahead to the coming week, there is not much by way of data from Canada but we have the FOMC rate decision and announcement followed by a speech from the Fed Chief Powell later in the week. If the Fed does signal a rate hike in the next couple of months and also hints of further rate hikes, we could see some further dollar strength which should push the pair towards the 1.30 region once again.
This article was originally posted on FX Empire
