The USDCAD pair has been trading in a weak state over the last few days. After having threatened a breakout and a large move just a couple of weeks back, we are now seeing the pair struggling to make a move higher and it has been under pressure since the beginning of the week. The pair is back in the old range between the 1.28 and the 1.30 regions over the last few days and it is likely to consolidate here till we get to the fag end of the week.
The Canadian dollar has been strengthened over the last couple of days due to the fact that the new NAFTA agreement is around the corner, It is one of the major trade agreements between the US and Canada and hence it assumes as lot of significance for Canada and their relationship with the US. With this being re-negotiated, there is hope all across the Canadian economic circles that they would be able to draw some extra benefits out of the new agreement.
There has not been any specific details being given out and what is being reported out there are just news and hearsay and more details are unlikely to emerge anytime soon. But the market as usual does not care to wait for all these developments and it is likely to keep pushing the CAD higher in the hope and anticipation that good things are only around the corner.
Looking ahead to the rest of the day, we do not have any major news from Canada but we have the ADP employment report from the US which could bring in a lot of volatility in the USDCAD pair in the short term. We believe that the impact would not be enough for the pair to make a breakout as such and the traders would have to wait for the NFP report on Friday to try and see if there is any move through the range.