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USD/CAD Daily Fundamental Forecast – January 18, 2018

The USDCAD pair had a day of huge volatility as the prices bounced and turned within a large range of 200 pips during the day yesterday. This was something that was expected and we had also mentioned as much in our forecast yesterday as the BOC was out with its rate announcement and statement yesterday and the prices jumped around following the announcement but ultimately settled down near the prices that it started the day with.

USDCAD Turns Volatile

The BOC hiked rates once again though it was only a month back or so that the BOC governor Poloz said that he did not have a timeline for the next rate hike. But the incoming data from Canada since that time has been very strong, especially the employment and retail sales numbers and hence the BOC, being known for hawkishness, did what was expected from it. We have to give credit to the BOC for being decisive and always being one step ahead of the curve and this has always been the case with them.

USDCAD Hourly
USDCAD Hourly

Even the last rate hike was done when the market was just beginning to expect it and price in the same and the BOC pushed it through leaving very little room for the markets to assume things and push the CAD in either direction. They have done the same ,this time as well, which led to a 100 pip fall in the pair followed by a move higher before the prices settled down in the mid range of the 1.24 region and continues to trade there as of this writing.

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Looking ahead to the rest of the day, we do not have any major news from the US or Canada and with the major news out of the way, expect some consolidation and ranging in this pair between the 1.25 an 1.24 region for the short term.

This article was originally posted on FX Empire

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