- The US dollar is gone back and forth during the course of the trading session again on Thursday, as we continue to see a lot of noise against the Canadian dollar.
- Ultimately, it looks like the 1.37 level is an area that a lot of people are paying attention to, and if we were to break above there, it could open up a much bigger move toward the 1.3850 level, possibly even the 1.39 level above there.
Bank of Canada
The Bank of Canada cut rates, and quite frankly it looks like the Canadian economy may be demanding even more cuts. The housing market is a huge problem for the Canadians right now, so I think it’s probably only a matter of time before we continue to see the US dollar swallow the Loonie. Whether or not we get a massive move higher remains to be seen, therefore I think you’ve got a situation where the USD/CAD market forecast will continue to see a lot of choppy volatility but something that favors the upside. After all, the interest rate differential between Canada and the United States is only widening at this point, and even if the Federal Reserve does start to cut interest rates, it will be the reason they cut rates that people will be paying attention to.
Top Forex Brokers
The reason I say this is that the Canadian economy is highly sensitive to the US economy, and therefore if the US economy start struggling and the Federal Reserve starts cutting rates, it may actually have the exact negative move in this market that people would anticipate. In other words, maybe people will be running to the US dollar for safety.
Another thing to keep in mind is that the oil market has been a bit spongy as of late, and therefore it makes sense that the Canadian dollar might be sold by traders in order to express their opinion on the crude oil market. In general, this is a market that I think continues to be noisy but I would not be surprised at all to see buyers jump in every short-term pullback, and try to push the USD/CAD pair toward the 1.39 level over the course of the summer.
Ready to trade our daily Forex analysis? We’ve made a list of the best forex brokers in Canada for beginners to trade Forex worth using.