A relatively quiet trading day as far as fundamental data is concerned, forex traders will eagerly await minutes from the last FOMC meeting where the US central bank cut interest rates by 25 basis points. The US Dollar remained at elevated levels and with markets pricing in more interest rate cut, can the current strength continue or should forex traders prepare for a sell-off? Existing home sales out of the US could also move price action as the housing market, a prime source for the consumer wealth effect which drives spending, has been overall weak. What does this mean for the USDCAD? Today’s fundamental analysis will cover the upside potential as well as downside risk of this currency pair.

Will the Bank of Canada join the chorus of central banks which cut interest rates? Canada’s economy is heavily dependent on commodity exports, but has so far benefited from the rally in precious metals which offset the drop in oil prices. Inflationary pressures remain well anchored and today’s CPI report is anticipated to show a small increase for July, partially reversing June’s surprise deflationary reading. Can the Canadian Dollar rally or will forex traders push for a breakout in the USDCAD? Subscribe to the PaxForex Daily Fundamental Analysis and take the profitable side of this trade!