Home USD/CAD Forecast July 18-22

USD/CAD posted slight losses last week, closing the week at 1.2953.  This week’s key events are Core CPI and Core Retail Sales.  Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

It was a data-light week in Canada. The BoC held rates at 0.50%, and Manufacturing Sales disappointed with a decline of 1.0%.  In the US, retail sales looked good, but inflation levels remained low and consumer confidence slipped.

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

USD_CAD_ Daily Chart July18-22..

  1. Foreign Securities Purchases:  Monday, 12:30.  This indicator is directly linked to currency demand, as foreigners must purchase Canadian dollars in order to buy domestic securities. The April release slipped to C$15.52 billion, but this was above expectations. The estimate for May stands at C$15.39 billion.
  2. Wholesale Sales:  Thursday, 12:30. Wholesale Sales is an important consumer spending indicator. The indicator remains weak and posted a small gain of 0.1% in April, shy of the forecast of 0.2%. The estimate for May stands at 0.2%.
  3. Core CPI:  Friday, 12:30. Core CPI excludes the most volatile items which comprise CPI. The index edged up to 0.3% in May, matching the forecast. The markets are expecting a dip in the June release, with an estimate of 0.0%.
  4. Core Retail Sales:  Friday, 12:30. This indicator excludes automobile sales, which are a volatile item that is included in retail sales. The indicator impressed in April with a gain of 1.3%, well above the estimate of 0.7%. The markets are expecting a small gain of 0.3% in the May release.
  5. CPI:  Friday, 12:30.  CPI is a key consumer spending indicator. The indicator came in at 0.4% in May, shy of the forecast of 0.5%. The estimate for the June release stands at 0.2%.
  6. Retail Sales:  Friday, 12:30. Retail Sales is the primary gauge of consumer spending. The indicator posted a strong gain of 0.9% in April, within expectations. This marked a 3-month high. The markets are braced for a weak reading in the May report, with an estimate of a flat 0.0%.

USD/CAD opened the week at 1.2909 and quickly touched a high of 1.2987, as resistance held firm at 1.2990  (discussed last week).  The pair then reversed directions and dropped to a low of 1.2863.  USD/CAD then moved higher and closed the week at 1.2953.

Live chart of USD/CAD: [do action=”tradingviews” pair=”USDCAD” interval=”60″/]

Technical lines, from top to bottom

We begin with resistance at 1.3353

1.3219 was a cap in April.

1.3081 is next.

1.2990 held firm as the pair started the week with strong gains.

1.2900 is an immediate support line. It could see action further in the week.

1.2780 is next.

1.2663 has held firm in support since early May. It is the final support line for now.

I am bullish on USD/CAD

With the Fed dampening speculation about a rate hike, the markets will be focusing on economic data, and the US economy is in better shape than its northern neighbor. As well, Brexit after shocks could hurt risk currencies like the Canadian dollar.

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Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.