Fundamental Analysis of USD/CAD for December 6, 2017

USD/CAD has been quite bearish recently after bouncing off the 1.2850 resistance area. CAD gained the impulsive momentum against USD due to recently published better than expected Employment Change, GDP, decrease in Unemployment Rate and Trade Balance deficit while USD is struggling with the lower inflation and indecision of further Interest Rate Hike in the future. Today is going to be a very important day for CAD as some high impact economic reports are going to be published including BOC Rate Statement where the Overnight Rate report will be published which is expected to be unchanged at 1.00% and Labor Productivity report is expected to show greater deficit at -0.4% from the previous value of -0.1%. Though there are no certain chances of a rate hike in Canada this month any hawkish outcome from the BOC Rate Statement is expected to provide the required push to CAD to gain further momentum against USD in the coming days. On the other hand, USD is quite weak ahead of the upcoming NFP, Unemployment Rate, Average Cash Earning and Rate Hike decision in this month. Though USD has gained quite well against CAD for a few months, any negative outcome of the upcoming economic reports may lead to losing all the gains against CAD accumulated in last few months. On the USD side, today ADP Non-Farm Employment Change report is going to be published which is expected to decrease to 189k from the previous figure of 235k, Revised Non-Farm Productivity is expected to increase to 3.3% from the previous value of 3.0%, Revised Unit Labor Cost is expected to decrease to 0.2% from the previous value of 0.5% and Crude Oil Inventories is expected to show less deficit at -3.2M from the previous figure of -3.4M. The economic reports are forecasted to be quite mixed with the results today but an increase in the number of positive economic reports may lead to further gain on the USD side leading to clear out the recent gains of CAD. As of the current scenario, the pair is expected to be quite volatile in nature due to the results of high impact economic reports to be published this week, whereas CAD is expected to be quite strong in comparison to USD, which may lead to further gains on the CAD side in the coming days.

Now let us look at the technical view, the price is currently residing below the resistance of 200 EMA and resistance area of 1.2760 to 1.2850 which is expected to lead to further bearish pressure in the coming days as the price remains below. There had been a Bearish Regular Divergence in the pair which was in effect when the price bounced off the 1.2850 area and proceeded on the bearish side impulsively. The price is currently expected to reach the support area of 1.2430-50 and later towards 1.2100 in the coming days.

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