The USDCAD pair experienced a decline in trading yesterday as the dollar faced weakness. There were no significant fundamental or economic developments to explain this movement, but it appears to be a result of positioning and trading ahead of upcoming news releases.
Despite rising oil prices providing some support to the Canadian dollar, the USDCAD pair continued to move lower as the dollar weakened and the CAD gained slightly. It is expected that oil prices will continue to rise in the coming days, offering further support to the CAD.
In the short term, focus is likely to be on the dollar as important data is expected in the next few days. This data will influence the Fed’s decision on rate hikes, with the market anticipating at least 3 rate hikes this year.
Looking ahead, there are no major news releases from Canada, but the US will release the Non-Farm Payrolls (NFP) report. Strong numbers in the NFP report could lead to a recovery in the dollar following a recent decline.
Overall, market participants are closely watching for upcoming data releases to gauge the strength of the US dollar and its impact on the USDCAD pair.