The Canadian dollar resumed its sharp slide last week, as USD/CAD jumped 300 points. The pair closed at 1.4169. The upcoming week is a quiet one, with just three events on the schedule. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.
The Canadian dollar has looked dismal, posting three sharp weekly losses in the past five weeks. Canadian Ivey PMI plunged in December to 49.9 points, compared to 63.6 points a month earlier. Employment Change rebounded with a strong gain in December, but this failed to stem the loony’s losses last week. In the US, the NFP report was outstanding, bolstering the greenback.
[do action=”autoupdate” tag=”USDCADUpdate”/]USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
- Housing Starts: Monday, 13:15. Housing Starts improved to 212 thousand in November, beating the forecast of 200 thousand. Little change is expected in the December report, with an estimate of 213 thousand.
- BOC Business Outlook Survey: Monday, 15:30. This highly respected report surveys about 100 businesses and covers a wide range of economic factors, including current business views on hiring, investing and spending. A positive report is bullish for the Canadian dollar.
- NHPI: Thursday, 13:30. This housing inflation index provides a snapshot of the level of activity in the Canadian housing sector. The index posted a gain of 0.3% in October, above the estimate of 0.1%.
USD/CAD Technical Analysis
USD/CAD opened the week at 1.3872 and quickly dropped to a low of 1.3848. It was all uphill from there, as the pair climbed to a high of 1.4177, breaking above resistance at 1.4157 (discussed last week). USD/CAD closed the week at 1.4169.
Live chart of USD/CAD: [do action=”tradingviews” pair=”USDCAD” interval=”60″/]
Technical lines, from top to bottom
With USD/CAD posting sharp gains last week, we start at higher levels:
We begin with resistance at 1.4480, which was an important cushion in April 2000.
1.4310 is the next line of resistance.
1.4157 was breached as the pair surged and has switched to a support level. It is a weak line.
1.4019 has also switched to support, just above the psychologically important 1.40 level.
The round number of 1.39 is the next line of support.
1.3757 is the final support level for now.
I am bullish on USD/CAD
The US dollar continues to hammer minor currencies such as the Canadian dollar, and the pair trades at its highest levels since August 2003. With the US registering strong employment numbers, we could see another hike from the Fed in March, which would likely add to the Canadian dollar’s misery.
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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.
- For the kiwi, see the NZDUSD forecast.
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