USD/CAD Fundamental Analysis – week of October 3, 2016 – Forecast

The pair continued within its broad range last week but looking ahead, we continue to be bullish on this pair. This pair proved to be one of the most volatile pairs last week with good 2-way movement but all within the wider range between 1.3050 and 1.3280. The pair was under the hold of different events. The bad retail sales data which arrived on the Friday before last continued to hold sway on the price and caused a weakening of the CAD during the early part of the week but still the bulls could not break through the wall of sellers at 1.3280.

Then came the news of an agreement between the producers at the OPEC meeting where they finally agreed to cut their oil production to boost oil prices. This strengthened the CAD and we saw this pair going down. Then,  after a period of consolidation, came the Canadian GDP on Friday which was better than expected and the pair tried to break through the bottom but couldnt and finally it settled the week in a neutral manner.

Looking ahead for the coming week, we have the CAD employment report coming out on the same day and time as the NFP report from the US on Friday. If one data was not enough to cause volatility, we have two coming at the same day and time and we should have some serious volatility during that time. Considering the weakening Canadian economy due to low oil prices and strengthening US economy along with the fact that we are getting closer and closer to a rate hike in the US and probably a rate cut in Canada, we are bullish on this pair in the medium and long term. The pair sits close to a crucial support at 1.2800 and we view the fall in the price over the past few weeks more as a correction of the previous bullish run than a bearish trend. So, is is advisable for medium and long term traders as well as investors to go long on this pair at this price with a SL below 1.2800. With all the news ahead, we should have an interesting week.