USDCAD has been trading in a choppy manner over the last 24 hours as the market seems to be waiting for the FOMC minutes which is scheduled to be released later in the day. The dollar has been weak so far heading into the release of the minutes and it remains to be seen whether it would continue to be so after the minutes as well. If it does, then we could see the resumption of the downtrend in this pair.
USDCAD in Choppy Mode
The market had been hopeful of another rate hike from the Fed in December ever since the last FOMC minutes kept the door open for a rate hike in that month. But since then, it has been disappointing for the dollar bulls as the incoming data has been weak to say the least. The big blow came in the form of weak NFP data last week and since then, the dollar has been on the backfoot and continues to be so as of this writing as well.
The market would expect to see some hints from the Fed members about the timeline for the next rate hike in the minutes today and if the minutes turn out to be hawkish, then we might well see the dollar being bought all around and we could have a upside breakout in the USDCAD pair. The oil prices have been supportive of the CAD over the last 24 hours but none of this would matter today if the minutes are hawkish.
On the other hand, if the Fed fails to give enough confidence to the markets that the rate hike is still on the horizon, then we could have a quick unravelling of the rate hike pricing in the markets and this could turn out to be very bad for the dollar in the short term. This could also mean the resumption of the downtrend in the USDCAD pair.
This article was originally posted on FX Empire
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