The Canadian dollar continued to lose ground last week. USD/CAD approached the 1.19 line, its highest level since May 2009. This week’s sole release is the Bank of Canada Business Outlook Survey. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.
The tale of two economies continues, as the US economy outperforms its northern neighbor. Canadian Employment Change posted a second straight decline, while Building Permits dropped sharply. In the US, employment data was solid, as Nonfarm Payrolls was higher than expected, and the unemployment rate fell to 5.6%.
[do action=”autoupdate” tag=”USDCADUpdate”/]USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
- Bank of Canada Business Outlook Survey: Monday, 15:30. This important release, published every quarter, surveys about 100 businesses. It provides a snapshot of the mood and health of the business sector and can have an impact on the movement of USD/CAD.
* All times are GMT
USD/CAD Technical Analysis
USD/CAD opened the week at 1.1793 and touched a low of 1.1731. The pair then sharply reversed directions and climbed all the way to 1.1890, pushing above resistance at 1.1872 (discussed last week). USD/CAD closed the week at 1.1862.
Live chart of USD/CAD: [do action=”tradingviews” pair=”USDCAD” interval=”60″/]
Technical lines, from top to bottom:
We begin with resistance at 1.2387. This line was an important cap, starting in May 2005.
1.2128 has remained intact as resistance since February 2009.
1.1975 is protecting the psychologically important level of 1.20. This line has held firm since November 2005.
1.1872 was a key resistance line in February 2007. It was tested late in the week and is currently a weak line.
1.1743 is the first line of support. It was tested early in the week but has strengthened as the pair trades at higher levels.
1.1640 is the next line of support.
1.1487 switched to support in mid-December as USD/CAD continued to rally higher.
1.1340 is the final support level for now. It has held firm since the first week of December.
I am bullish on USD/CAD
The Canadian economy continues to struggle, as underlined by weak job numbers last week. The low price of oil is putting a serious dent in export revenue and could lower inflation which is already at very low levels. The US economy continues to look solid, and an expected rate hike is good news for the US dollar.
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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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