The USDCAD pair continues to trade near the highs of its new bearish range as the pair trades just below 1.2980 as of this writing. The pair is in a consolidation phase with a bearish bias, something that we had mentioned in our forecasts since the beginning of the week. The bearish trend is here to stay and we have seen the bears fend off successive attempts at breaking through the key 1.3000 region over the past week or so and this shows who is in control.
USDCAD Likely to Be Under Pressure
The oil prices did fall a bit yesterday but that seemed to have little impact on the CAD which continues to look strong in the short and the medium term. The dollar did not get much support from the FOMC which turned out to be a disappointment. Many traders had expected a lot from the Fed and had hoped that it would lead to a continued recovery in the dollar but they have been left largely disappointed as the Fed members repeated what was already know about the inflation and the economy and did not add anything new or different. This has forced the investors and traders to look towards the economic data from the US to get some hints on when the next rate hike would be.
A strong indicator of that would be the employment report and with this in mind, the traders need not wait too long for that as we have the ADP employment report today and the NFP tomorrow. On the other hand, it is clear that the Canadian economy is on the path to development and this has been repeatedly proven through the data from Canada. Some more evidence of that is likely to come in today when the trade balance data is released.
We will also be seeing the oil inventory data from the US and the PMI data as well but the focus would be on the ADP as it is a precursor to the NFP data tomorrow and hence likely to bring in a lot more volatility.
This article was originally posted on FX Empire