The monthly release of GDP on Friday is stands out in a light-calendered week. Here’s an outlook for the Canadian events and an updated technical analysis for USD/CAD.

USD/CAD chart with support and resistance lines on it. Click to enlarge:

The initial reaction to the rate hike was weak, as the BOC also lowered the economic forecasts. But all in all, the loonie made gains, enjoying good fundamentals. Will the overall activity also be positive?

1. RMPI: Published on Thursday at 12:30 GMT. The Raw Materials Price Index is significant for Canada, with its export oriented economy. Last month’s number was for the month of May, which saw prices plunge due the economic turmoil – 7.2%. A correction is expected now, with a 1.1% rise.
2. GDP: Published on Friday at 12:30 GMT. Canada is unique by publishing its GDP once per month. After a strong first quarter, the economy slightly slowed down, with an unchanged GDP last month, for the first time in 8 months. The economy is expected to return to growth now, but probably only 0.1%.

USD/CAD Technical Analysis

Loonie traders expect a busy week, with important releases every day of the week, with the rate decision being the main highlight. Here’s an outlook for the Canadian events, and an updated technical analysis for USD/CAD.

USD/CAD daily chart with support and resistance lines marked. Click to enlarge:

The Canadian dollar continued enjoying the superb employment figures that we’ve seen in the previous week. It will be interesting to see how jobs impact the rate decision, but there are other factors as well. Let’s start:

1. Foreign Securities Purchases: Published on Monday at 12:30 GMT. This indicator shows the flow of foreign money into Canada, and serves as a vote of confidence. After turning negative two months ago, the number surprised again, but this time to the upside – 12.36 billion, the highest level in 7 months. A lower outcome is expected now – 8 billion.
2. Rate decision: Published on Tuesday at 13:00 GMT. Mark Carney’s BOC made the initial rate hike last month. Canada’s Overnight Rate currently stands at 0.50% and is likely to get another boost to 0.75%. Despite one month of a stall in the GDP, the job market is doing well, and the steady global recovery supports another hike. It’s also important to note the accompanying statement, which will provide hints for the future.
3. Wholesale Sales: Published on Wednesday at 12:30 GMT. The total value of sales at the back end, the wholesaler level, is quite volatile. After a strong rise two months ago, the volume of sales dropped by 0.3% last month, disappointing the loonie. A small rise of 0.3% is expected this time.
4. Retail Sales: Published on Thursday at 12:30 GMT. This key consumer figure was terrible last month – retail sales fell by 2%, and also core retail sales, closely watched by the central bank, fell by 1.2%. After these strong drops, both indicators are expected to correct this time and rise by 0.5%. The loonie will rock on this release.
5. BOC Monetary Policy Report: Published on Thursday at 14:30 GMT. The report lays out the bank’s views about inflation, employment and growth, and may contain future prospects, including the interest rate. 45 minutes after the release of this important report, BOC governor Mark Carney will hold a press conference and may release some interesting quotes.
6. CPI: Published on Friday at 11:00 GMT. Canadian inflation is under control. Both CPI and Core CPI rose by 0.3% last month, very stable indeed. A significant rise in consumer prices will force the bank to raise the rates at an accelerated pace. This is a strong indicator to close the week.

USD/CAD Technical Analysis

The Canadian dollar expects 4 events in the upcoming week, after rising against the greenback. Here’s an outlook for these events and an updated technical analysis for USD/CAD.

USD/CAD daily chart with support and resistance lines. Click to enlarge:

Excellent employment figures on Friday gave a huge boost to the loonie. It seems that the Canadian economy is doing well, regardless of oil prices. Let’s start:

1. BOC Business Outlook Survey: Published on Monday at 14:30 GMT. This quarterly report always has a strong impact on the loonie. The survey of 100 businesses describe their sentiment towards the economy for the next quarter. A good report is expected this time, showing sustainable growth.
2. Trade Balance: Published on Tuesday at 12:30 GMT. Canada enjoys a surplus in the trade balance for already 5 months, although this surplus squeezed to only 200 million last month. It’s now expected to grow to 400 million. Note that the American trade balance is released at the same time, and this always means volatile trading in USD/CAD around this release.
3. Manufacturing Sales: Published on Thursday at 12:30 GMT. This important indicator was positive in the past 8 months, growing nicely in most months. After a rise of 0.2% in factory sales, a rise of 0.4% is predicted now.
4. Leading Index: Published on Friday at 12:30 GMT. Most of the 10 components of this index have already been released. Nevertheless, the release tends to surprise and shake the Canadian dollar. After a strong rise of 0.9% last month, a more modest rise of 0.5% is expected now.

USD/CAD Technical Analysis

Employment figures are the highlight of this week’s loonie trading. Here’s an outlook for the Canadian events, and an updated technical analysis for USD/CAD.

USD/CAD daily graph with support and resistance lines on it. Click to enlarge:

The Canadian dollar continues to be sensitive to the price of oil, as well as the troubles in Europe. GDP released last week was very disappointing – 0% growth. This hurt the loonie badly. Another jump in jobs will remind us about the strength of the Canadian economy. Let’s start:

1. Building Permits: Published on Tuesday at 12:30 GMT. After a few months of drops, this important yet volatile indicator leaped in the past few months: 12.3% and 5.4%. A smaller rise in building permits is expected this time. A drop will hurt the loonie.
2. Ivey PMI: Published on Wednesday at 14:00 GMT. The Richard Ivey Business School has shown a very positive number last time – 62.7 points. This survey of 175 senior purchasing managers is expected to show a small drop this time, but the number is expected to stay above 50 points.
3. NHPI: Published on Thursday at 12:30 GMT. The New Housing Price Index is a very stable indicator. It showed that prices ticked up by 0.3% in the past two months. Another similar rise is expected this time. This figure is often overshadowed by other releases, and now we can see its full impact.
4. Employment data: Published on Friday at 11:00 GMT. We saw great number in the past two months. The rise of 108,700 jobs seen two months ago was confirmed last month, and we also saw another positive surprise with a rise of 24,700 jobs then. Employment change is expected to show a similar gain this time. The unemployment rate, which stabilized on 8.1% in the past two months, is expected to edge down to 8%.
5. Housing Starts: Published on Friday at 12:15 GMT. This figures might be disregarded if there’s a big surprise in the employment data. After topping 200K, the number of starts slowed down and dropped to 189K last month, causing some worries. We’ll now see if this was a one time drop or a change of trend.

USD/CAD Technical Analysis

Canadian monthly GDP is the highlight in the upcoming week. Here’s an outlook for the Canadian events and an updated technical analysis for USD/CAD.

USD/CAD daily chart with support and resistance lines on it. Click to enlarge:

Canadian CPI came out as expected, and this wasn’t loonie-positive. There’s no rush for speedy tightening cycle by the central bank.

1. RMPI: Published on Tuesday at 12:30 GMT. The Raw Materials Price Index made a leap in last month’s release – 1.7%, stronger than expected. The Canadian dollar isn’t expected to enjoy this indicator now, as the figure relates to May, a bad month in the global markets.
2. GDP: Published on Wednesday at 12:30 GMT. The Canadian economy grew by 0.6% in March, better than expected. This concluded a great first quarter with an annual growth rate of 6.1%, double the American growth rate. A similar growth rate is expected in April, the first month of Q2.

USD/CAD Technical Analysis

The loonie enjoyed risk appetite for a second week in a row. This week consists of key indicators for the next rate decision. Here’s an outlook for Canadian events and an updated technical analysis for USD/CAD, which is closer to parity once again.

USD/CAD chart with resistance and support lines on it. Click to enlarge:

The markets disregard the European trouble (with focus now on Spain again) and seek “risky” currencies. The Canadian dollar also enjoys the rising price of oil, and his its eyes on parity. Prices need to rise in other areas in order to push inflation. Let’s start:

1. CPI: Published on Tuesday at 11:00 GMT. A rise in the consumer price index is necessary for further rate hikes, after the BOC made its first move. Current inflation conditions are still tame. CPI rose by 0.3% last month after remaining unchanged beforehand, and Core CPI, which is also closely watched by the central bank, also rose by 0.3%. More modest rises are expected this time.
2. Retail Sales: Published on Wednesday at 12:30 GMT. This major consumer indicator made a surprising jump last month – 2.1% instead of 0.2% that was predicted. Also the core figure was a big surprise, jumping by 1.7%. Yet again, the expectations remain modest, with a rises of less than 1% predicted in both indicators.

USD/CAD Technical Analysis

Many economic figures are released in Canada in the upcoming week, but the highlights will be two appearances by Mark Carney, head of the BOC. Here’s an outlook for the Canadian events, and an updated technical analysis for USD/CAD, now at lower levels.

USD/CAD graph with support and resistance lines on it. Click to enlarge:

The Canadian dollar took advantage of the relative calm in the markets, and made a gain of over 300 pips against the greenback. The Canadian fundamentals will probably outperform the American ones once again this week. Let’s start:

1. New Motor Vehicle Sales: Published on Monday at 12:30 GMT. The automobile industry is a significant part of the Canadian economy, so this release early in the week will probably move the loonie. Last month’s 4.2% drop was very disappointing, and a correction will probably be seen this time.
2. Manufacturing Sales: Published on Tuesday at 12:30 GMT. Total sales made by manufacturers rose in the past 7 months. After a neat rise of 1.2% last month, a smaller rise is predicted this time in factory sales.
3. Labor Productivity: Published on Tuesday at 12:30 GMT. Workers made a big leap in productivity last month – 1.4%, but this wasn’t good for the loonie – as this means that more work is done for the same cost – less inflationary pressures. A small drop in productivity is predicted this time.
4. Mark Carney talks: The head of the BOC will make a first appearance on Wednesday at 15:50 GMT at Charlottetown, and will make a second public appearance on Friday at 10:30 GMT at St. John’s. The head of the central bank will have an opportunity to shed his views about the improving economy, the European worries and further rate hikes. He usually moves the loonie when he talks.
5. Wholesale Sales: Published on Thursday at 12:30 GMT. Complementing Tuesday’s figure, nice growth has also been seen in the wholesalers level, but this figure has been less stable, jumping up and down in recent months. A small rise is expected this time as well. Note that the figure relates to April.
6. Leading Index: Published on Friday at 12:30 GMT. This indicator is built from 9 economic indicators – some of them already released. Nevertheless, the release of this index always moves the loonie. In the past two months, the leading index rose nicely, exceeding expectations. After a 0.9% rise last month, a rise at a lower rate is expected this time.
7. Foreign Securities Purchases: Published on Friday at 12:30 GMT.  This indicator shows the flow of foreign money in or out of the economy – thus being a measure of confidence. After a few months of strong flows, last month saw a big disappointment, as the figure was negative – 620 million. A correction is expected this time.

USD/CAD Technical Analysis

USD/CAD chart with support and resistance lines marked on it. Click to enlarge:

Job data was better than expected in Canada, but this was far from enough to battle the might greenback that enjoyed risk aversive trading on Friday, following the disappointing Non-Farm Payrolls. This week features a head to head battle with the trade balance. Let’s start:

1. Mark Carney talks: Starts speaking on Monday at 17:50 GMT, and will hold another speech on Thursday at 12:30 GMT. Following his move on the rates, the BOC’s governor will have a chance to explain the move and lay out his expectations for the next months in a conference in Montreal.
2. Housing Starts: Published on Tuesday at 12:15 GMT. This major indicator has steadily climbed in recent months. It already passed the 200K mark, standing at 201K last month (annualized). The forecast for housing starts is another climb to 206K.
3. Trade Balance: Published on Thursday at 12:30 GMT. The surplus in the Canadian trade balance dropped sharply last month to 0.3 billion, indicating weaker demand abroad. The surplus is expected to grow back to 0.7 billion, still lower than two months ago. At the same time, the American trade balance is released as well, making it a volatile timing for USD/CAD. In the US, the deficit is expected to remain almost unchanged at 40 billion.
4. NHPI: Published on Thursday at 12:30 GMT and overshadowed by the trade balance release. This housing figure has also showed steady growth in recent months, ticking up slowly, too slow. The New House Price Index is expected to rise by 0.3%, exactly like last month.
5. Capacity Utilization Rate: Published on Friday at 12:30 GMT. The economy is still far from utilizing all its resources, but an improvement is underway. The forecasts stand on a rise from 70.9% to 73.4% in the utilization rate.

USD/CAD Technical Analysis

The Canadian dollar traded between 1.04 and 1.0550 during most of the week. It then dipped below 1.04 and reached 1.0333, but that proved to be a false break. Friday’s extreme trading sent it to the other direction, it broke above 1.0550 and closed at 1.0623.

USD/CAD currently trades between 1.0550 and 1.0750. Most lines haven’t changed since last week. The upper border is very strong – it used to be the resistance line of a trading range that the loonie was in for several months, and also worked as a resistance line recently.

Higher, 1.0850 is the next line of resistance, working as such before the loonie entered the range. The next line is 1.1130, which capped the pair more than once, and now provides strong resistance. Even higher, 1.1470 is the next stronghold, but that’s quite far now.

Looking down, 1.04 remains a strong line of support, despite being falsely broken recently. Below, 1.03 provides minor support, and it’s followed by a more important line – 1.02, which was the 2009 low, and worked as a clear line of support and resistance in recent weeks.

The ultimate line of support is parity, a line that the pair reached in April, but seems quite far now.

I am bearish on USD/CAD

The fresh figures from Canada were quite convincing. The rate hike should push the pair lower, overcoming risk aversive trading that follows bad news from Europe.

Further reading:

• For a broad view of all the week’s major events worldwide, read the forex weekly outlook.
• For the Euro/Dollar, look into the EUR USD Forecast.
• For the British Pound (sterling), read the GBP/USD forecast.
• For the Australian dollar (Aussie), check out the AUD/USD forecast.
• For the New Zealand dollar (kiwi), read the NZD/USD forecast.
• For USD/CAD (loonie), check out the Canadian dollar forecast.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

USD/CAD graph with support and resistance lines marked. Click to enlarge:

An improvement in the current account and the temporary relief that the markets felt on Thursday helped the loonie recover from new lows. This week, it’ll be mostly about Canadian figures. Let’s start:

1. GDP: Published on Monday at 12:30 GMT. After a few strong months, especially a strong growth rate in Q4, Canada’s monthly GDP rose by only 0.3% last month, disappointing the markets. A return to stronger growth is expected now – 0.5%. This figure is for March, thus completing the data for the first quarter. The loonie will shake around this release.
2. RMPI: Published on Monday at 12:30 GMT and overshadowed by the GDP release. Canada’s oil export is a significant part of the country’s economy. Prices of raw materials are expected to rise b 1.1%, stronger than last month. Note that the data relates to April. The drop in oil prices will be reflected in the next release.
3. Rate decision: Published on Tuesday at 13:00 GMT. Mark Carney made it clear last month – the interest rate is going to rise. The big question is if it will happen now, or in the next decision due on July 20th. On one hand, the recent drop in the Canadian dollar’s value make it easier for the BOC to raise the rates now. On the other hand, the recent turmoil might make it a bad timing. Any decision, whether its a rise to 0.5% or an unchanged value of 0.25%, will rock the loonie. It’s also important to note the BOC Rate Statement concerning future moves. This will provide a forecast for future moves.
4. Employment data: Published on Friday at 11:00 GMT. After a whopping rise of 108,700 jobs last month, more than 4 times the early expectations, a modest rise is expected this time – 20,700, similar to job gains in previous months. In the past, huge leaps boosted the loonie, but now the trend is different, and a disappointment can send it way down. The unemployment rate also exceeded expectations last month, dropping to 8.1%. Another drop to 8% is expected now. An unchanged value won’t be too bad.
5. Building Permits: Published on Friday at 12:30 GMT. This figure is slightly overshadowed by the American release of the Non-Farm Payrolls. Also here, a big leap was seen last month – 12.2%. This corrected 4 straight months of drops. A correction in the other direction is predicted now – a drop of 1.6%.
6. Ivey PMI: Published on Friday at 14:00 GMT. This important gauge from the Richard Ivey Business School closes the week. The past two months saw positive surprises, with the index reaching 58.7 points. Economists forecast another rise to 59.6 points, but the global trouble, could make the 175 purchasing mangers more cautious this time. A drop won’t be a surprise.

USD/CAD Technical Analysis

The pair began the week with strong action – it rose and stopped at the 1.0850 resistance line – the highest levels in 6 months. The loonie then recovered going under the important 1.0750 line, and after aiming for 1.04, it closed just under 1.0550.

USD/CAD now trades between 1.0550, which is a minor resistance line that played a role in recent weeks, and the strong support line of 1.04, which had a role both as a support line and as a resistance line many times in recent months. Note that some lines have been modified since last week’s outlook.

Looking down, the next line of support under 1.04 is 1.02 – this was the 2009 low, and it also played an important role in April – when USD/CAD broke under it, the road to parity was open. Below, the ultimate line is parity. There are further support lines on the road, but they’re too far now.

Looking up, 1.0750, which was the top border of a long-term range, is still a strong resistance line. It’s break in the past week was temporary. The next line, 1.0850, proved to be valid, as it stopped the upwards movement now.

Even higher, 1.1130 worked several times as a resistance line, and will come in handy if the pair jumps above 1.0850. The next line is 1.1470, but that’s to far now.

I continue being bearish on USD/CAD.

As tensions eased in Europe, the Canadian dollar re-enjoyed its good fundamentals. This week, major Canadian events should give it another boost, perhaps opening the road to USD/CAD parity once again.

Further reading:

• For a broad view of all the week’s major events worldwide, read the forex weekly outlook.
• For the Euro/Dollar, look into the EUR USD Forecast.
• For the British Pound (sterling), read the GBP/USD forecast.
• For the Australian dollar (Aussie), check out the AUD/USD forecast.
• For the New Zealand dollar (kiwi), read the NZD/USD forecast.
• For USD/CAD (loonie), check out the Canadian dollar forecast.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

USD/CAD chart with support and resistance lines marked. Click to enlarge:

The higher-than-expected rise in prices raises expectations for a rate hike in the upcoming meeting on June 1st. This event will create tension. Let’s start:

1. Corporate Profits: Published on Thursday at 12:30 GMT. After terrible falls during the financial crisis, the past two quarters put a smile on Canadian firms, with rises of 7.9% in profits each time. A smaller rise is predicted now.
2. Current Account: Published on Friday at 12:30 GMT. Contrary to its trade balance which shows a surplus in goods balance, the overall figure, the current account, showed a deficit in the past 5 quarters. This time, the deficit is expected to squeeze from 9.8 to 9 billion, but a smaller deficit won’t be a big surprise.

USD/CAD Technical Analysis

At the beginning of the week, the loonie made an attempt to break the 1.02 level. After this attempt failed, USD/CAD rose towards above 1.04 but found fresh resistance around 1.0550. Yet again, the strong resistance line of 1.0780 continued to hold back the pair, as it closed just under 1.06.

Note that some lines were added on last week’s outlook, especially higher lines. The current range is between 1.0550, which provided temporary resistance in the past week, to 1.0780, which proved to be a very strong resistance line, surviving five breakout attempts in the past 6 months.

Higher, 1.0850 was a line of resistance before the pair dropped, and is a minor line of resistance. Above this line, 1.1130, which worked twice as a resistance line in September 2009, is a very strong line of resistance. 1.1470 is the next significant line, but it’s far now.

Looking down, 1.04, which worked as a successful line of resistance and support, is the next barrier. It’s followed by the minor support line of 1.03, which worked as a temporary line of resistance during recent weeks.

Below, 1.02, which was the 2009 low, provided strong support. This line also worked as a resistance line after the USD/CAD reached parity during April. And parity, 1, is the last line for today. There are lines of support below, but they’re far in the distance.

I am bearish on USD/CAD.

The Canadian dollar suffered from the European crisis, but after the German parliament approved the bailout package, the dust will settle, at least temporarily, and allow the loonie to enjoy its good fundamentals and recover.

Further reading:

• For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
• For the Euro, read the EUR USD Forecast.
• For the British Pound, look into the GBP/USD forecast.
• For the Australian dollar, read the AUD/USD forecast.
• For USD/CAD, check out the Canadian dollar forecast.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.