USD/CAD Fundamental Analysis – week of March 19, 2018

The USDCAD pair gained strength during the course of the week as the dollar moved higher steadily during this period. The move in the dollar is due to the fact that there is growing anticipation in the market about the Fed meeting that is scheduled to be held next week and this has helped the pair to climb above 1.30.

USDCAD Climbs Above 1.30

In what could turn out to be a case of buy the rumor and sell the fact, the pair has been doing very well as we have been seeing dollar buying all across the markets towards the end of last week in the hope that the Fed would act and that it would hike rates in the coming week. While this is likely to turn out to be true, the market would also hope that they lay down the guidelines for future rate hikes as well and this is where the market is likely to be disappointed. The maret is hoping that there would be 4 rate hikes during the course of the year and that the Fed would continue to remain hawkish about it.

But we are likely to see that the Fed sticks to its stand that the future rate hikes would be dependent on the incoming data and this is likely to disappointment the dollar bulls a tad. But the fact that the pair has shot through the 1.30 region despite the strong oil prices has shown that the pair is clearly under the control of the bulls and this is going to help the bulls in maintaining the trend despite some moderate correction.

Looking ahead to the coming week, we have the Fed meeting and we also have the retail sales and the inflation data in the form of CPI, from Canada. The BOC has been forced on to the backfoot due to the choppy data and also due to geopolitical tension that we have seen, with the threat of a trade war breaking out, and they would need some help from the incoming data to help them to continue to be hawkish. With so much news and data scheduled for the coming week, we are likely to see a lot of volatility but we believe that at the end of it all, the bulls will continue to remain in control.