USD/CAD Fundamental Analysis – week of July 24, 2017
The USDCAD continued on its downward journey through the course of last week which was not a major surprise considering how weak the dollar is, across the board, and how strong the CAD has been, with the ample support of data and the BOC as well. We now reach a crucial price region in this journey and we can already see the downward move slowing down towards the end of the week. We believe that we could see a bounce from this price region but only time will tell.
USDCAD Continues Its Downtrend
Last week, the relentless move down continued in the pair and there was no respite for the dollar. During the early half of the week, there were signs of recovery from the dollar which helped the pair to reach a high of 1.27 but for those who have been tracking the fundamentals of this pair over the last few months, it was pretty clear that the move was more a correction than any change it trend. The bounces have been few and far between and they were always followed by moves that pushed the pair even further down and this was also very much expected to happen even when the dollar was recovering.
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The trigger for the next round of dollar weakness came about when there were reports that there would be a investigation into some of the business transactions of Trump and this led to a dollar sell off. The downtrend in the pair resumed and even though the retail sales and CPI data from Canada on Friday missed their mark, the pair closed the week very close to the lows of its range.
In the upcoming week, we do not have any major economic news or data from any part of the world except the FOMC statement from the US. It is the last week of the month when the liquidity is generally low and hence the volatility is also low as well and this is another reason why we believe that the bulls in the USDCAD pair could use this opportunity to help the pair have a decent bounce from this region. It may be a good region to take some profit off the table for the bears and wait and see what happens.