USD/CAD Fundamental Analysis: January 20, 2017
The USD/CAD continued to exhibit a strong trading streak during the previous trading session as the after-effects of the BoC’s economic policies continue to have an effect on the Canadian dollar, with the CAD weakening across the board during the previous session as a result. The USD/CAD is trading just above 1.3300 points and could be in for more consolidation within its trade highs for today unless the US dollar suddenly drops in value.
The Bank of Canada has already made it clear that the Canadian economy has not made any substantive progress during the past months, and this stagnation might prompt the central bank to make interest rate adjustments in the coming months. Economic data coming from this region was generally good, but low oil prices have already become a matter of concern for the BoC since the country is hugely reliant on oil, and this is why it is highly possible that the BoC might decide to implement rate cuts towards the end of 2017. This is also why the CAD continues to drop in value, and why corrections in this particular currency has always been met with strong buys. If the currency pair manages to reach 1.3500 points, then the pair could possibly reach up to 1.4000 which could be easily achieved within the year if the Fed hikes its interest rates and the BoC implements a rate cut.
Canada will be releasing its CPI data as well as its retail sales data during the New York trading session, and if any of these two data comes out as weak, then this will be merely a confirmation of a weakening Canadian economy, and the pair could possibly go upwards to 1.3400 and could even reach 1.3500 points.