The Canadian dollar was almost unchanged last week, as USD/CAD closed at 1.0650. This week’s highlights are Building Permits, Ivey PMI and Employment Change. Here is an outlook on the major events and an updated technical analysis for USD/CAD.
US employment numbers sparkled last week, led by Nonfarm Payrolls, which hit 288 thousand. As well, the Unemployment Rate dipped to 6.1%. Canadian GDP posted a paltry gain of 0.1%, as economic activity remains weak.
[do action=”autoupdate” tag=”USDCADUpdate”/] USD/CAD daily chart with support and resistance lines on it.
Click to enlarge: 
- Building Permits: Monday, 12:30. Building Permits tends to show strong fluctuations, often resulting in estimates which are well off the mark. The indicator bounced back last month with a gain of 1.1%, but this fell short of the estimate of 4.1%. The markets are expecting a strong gain in the upcoming release, with an estimate of 3.1%.
- Ivey PMI: Monday, 14:00. Ivey PMI slid to 48.2 points in May, the first time the index fell below the 50-point level this year. This level separates between expansion and contraction, so the index has looked solid for most of the year. The markets are expecting an improvement in the June release, with an estimate of 51.3 points. Will the indicator follow suit with a strong reading?
- BOC Business Outlook Survey: Monday, 14:30. This quarterly release surveys about 100 businesses, which are surveyed on a wide-range of economic conditions which affect the business sector such as hiring, spending and investment. The BOC report is well-respected and can affect the movement of USD/CAD.
- Housing Starts: Wednesday, 12:15. Housing Starts hit 198 thousand last month, a seven-month high. This easily beat the estimate of 185 thousand. The indicator has looked strong, with three of the past four readings above the 190 thousand level. The markets are expecting a slight downturn in June, with an estimate of 191 thousand.
- NHPI: Thursday, 12:30. New Housing Price Index is an important gauge of activity in the Canadian housing sector. The indicator has been very steady, with three straight readings of 0.2%. The estimate for the upcoming release stands at 0.3%.
- Employment Change: Friday, 12:30. Traders should treat this key indicator as a market-mover. The indicator bounced back in May with a strong gain of 25.8 thousand, beating the estimate of 24.5 thousand. Another solid release is expected, with the June estimate standing at 26.2 thousand. The Unemployment Rate is expected to remain at 7.0%.
* All times are GMT.
USD/CAD Technical Analysis
USD/CAD opened the week at 1.0667 and touched a high of 1.0696, breaking above resistance at 1.0660 (discussed last week). The pair then dropped to the support level of 1.0621 and closed the week at 1.0649.
Live chart of USD/CAD: [do action=”tradingviews” pair=”USDCAD” interval=”60″/]
Technical lines, from top to bottom:
We begin with resistance at 1.1369. This line 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.
1.1124 remains a strong resistance line. It has held firm since late March.
The psychological barrier of 1.10 has provided resistance since May, and has some breathing room with the Canadian dollar trading at higher levels. This is followed by resistance at 1.0945.
1.0815 remains a strong resistance line as the Canadian dollar has improved and moved into 1.06 territory.
1.0737 was easily breached by the pair and has reverted to a resistance role. This line was a cap in mid-2010, before the US dollar tumbled and dropped all the way into 0.93 territory.
1.0660 began the week as weak support but was breached and has switched to a resistance role. It remains a weak line and could see action early in the week.
1.0526 has been a strong support line since late November. 1.0422 was a key support line in mid-November.
1.0271 is the next support line. This line marked the start of a rally by the pair last October, which saw the US dollar climb above the 1.12 line.
1.0182 is the final support level for now. This line has held steady since September.
I am bullish on USD/CAD
US releases have looked strong since a weak GDP reading, and the US dollar could ride out some further gains after Friday’s excellent Nonfarm Payrolls report. If Canada’s key releases fail to meet expectations this week, the loonie could slip.
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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