The Canadian dollar continued its losing ways last week. The currency lost about a cent, as USD/CAD closed the week above the 1.09 line. There are five major releases this week, highlighted by Employment Change. Here is an outlook on the major events and an updated technical analysis for USD/CAD.
Canadian inflation and GDP numbers were solid last week, but that wasn’t enough to support the sagging Canadian dollar. In the US, consumer confidence and manufacturing data were strong, but Nonfarm Payrolls took a tumble in June and was well off expectations.
[do action=”autoupdate” tag=”USDCADUpdate”/] USD/CAD daily chart with support and resistance lines on it.Click to enlarge: 
- Trade Balance: Wednesday, 12:30. Trade Balance is directly linked to currency demand, as foreigners must purchase Canadian dollars in order to buy Canadian exports. Canada has posted two consecutive trade deficits, and the markets are expecting another deficit in July, with an estimate of -$0.1 billion.
- Building Permits: Thursday, 12:30. Building Permits is marked by strong fluctuations, making accurate estimates a tricky task. In June, the indicator soared 13.8%, crushing the estimate of 3.1%. However, the markets are braced for a decline in the upcoming release, with an estimate of -1.8%.
- Ivey PMI: Thursday, 14:00. For the past two releases, Ivey PMI has been below the 50 line, which separates between contraction and expansion. The June release dipped to 46.9 points, the worst in 2014. Will July bring better news? The markets think so, with an estimate of 54.1 points.
- Employment Change: Friday, 12:30. This event is the highlight of the week and can have a major impact on the movement of USD/CAD. The indicator sagged in June, with a decline of 9.4 thousand. This was nowhere near the estimate of a gain of 20.7 thousand. The markets are expecting a strong turnaround in the upcoming release, with the estimate standing at +25.4 thousand. Will the indicator follow suit with a strong gain? The Unemployment Rate is expected to edge down from 7.1% to 7.0%.
* All times are GMT.
USD/CAD Technical Analysis
USD/CAD opened the week at 1.0812 and quickly dropped to a low of 1.0796. The pair then reversed directions, climbing all the way to 1.0944, just shy of resistance at 1.0945 (discussed last week). USD/CAD closed the week at 1.0915.
Live chart of USD/CAD: [do action=”tradingviews” pair=”USDCAD” interval=”60″/]
Technical lines, from top to bottom:
With the Canadian dollar losing ground, we start at higher levels:
There is resistance at 1.1494. This line has remained intact since November 2006, when the US dollar broke through and continued to rally to a high above the 1.18 line.
1.1369 was breached in October 2008 as the US dollar posted sharp gains, climbing as high as the 1.21 level. This line has remained steady since July 2009.
1.1278 has provided resistance since March. This line marked the start of a rally by the Canadian dollar, which dropped below the 1.09 level.
1.1124 remains a strong resistance line.
The psychological barrier of 1.10 has provided resistance since May. Will the improving US dollar break through this week?
1.0945 barely held on in a resistance role, as the pair pushed to high of 1.0944. It is currently a weak resistance line.
1.0815 was easily breached as the pair posted strong gains and has switched to a support role.
1.0737 is providing strong support. This line was a cap in mid-2010, before the US dollar tumbled and dropped all the way into 0.93 territory.
1.0684 saw a lot of activity in early July and was breached as the Canadian dollar lost ground.
1.0526 has been a strong support line since late November.
1.0422 was a key support line in mid-November. This is the final line for now.
I am bullish on USD/CAD
The US dollar has enjoyed broad gains, and the sagging Canadian dollar finds itself heading towards the key 1.10 level. Canadian numbers will have to look sharp this week or the loonie is likely to lose more ground to its US counterpart.
Further reading:
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro to Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- USD/CAD (loonie), check out the Canadian dollar.
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