The Canadian dollar showed some movement in both directions but was little changed at week’s end. USD/CAD posted slight losses, closing the week at 1.1231. This week’s highlights are Retail Sales and GDP. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.
Canadian Wholesale Sales impressed with a sharp gain in September. The Canadian dollar held its own despite solid US inflation, housing and manufacturing numbers out of the US.
[do action=”autoupdate” tag=”USDCADUpdate”/]USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
- Core Retail Sales: Tuesday, 13:30. This indicator excludes the most volatile items which are included in Retail Sales. The indicator has looked awful, posting two straight declines. However, the estimate for the upcoming release stands at 0.4%. Will the indicator meet or beat the prediction?
- Retail Sales: Tuesday, 13:30. Retail Sales is the primary gauge of consumer spending, a key component of engine growth. The indicator has also posted two straight declines, but the October reading is expected to post a respectable gain of 0.6%.
- Corporate Profits. Tuesday, 13:30. The indicator is released each quarter, magnifying the impact of each release. The indicator slowed down in Q2 but still posted a gain of 2.6%, marking four consecutive quarters of growth.
- Current Account: Thursday, 13:30. Canada continues to post current account deficits, but showed some improvement last quarter with a reading of C$11.9 billion. The deficit for Q3 is expected to narrow to C$10.3 billion.
- GDP: Friday, 13:30. GDP is one of the most important economic indicators and should be treated by traders as a market-mover. Unlike most other industrial economies, Canada releases GDP each month. The markets are expecting better news in the September reading, with an estimate of 0.4%.
- RMPI: Friday, 13:30. The Raw Materials Price Index measures inflation in the manufacturing sector. The index has looked very weak, posting four declines in the past five readings. The October release is expected to bring better tidings, with an estimate of 1.5%.
* All times are GMT.
USD/CAD Technical Analysis
USD/CAD opened the week at 1.1289 and climbed to a high of 1.1369. The pair then reversed directions and fell to a low of 1.1190. USD/CAD closed the week at 1.1231, as resistance at 1.1271 (discussed last week) remains in place.
Live chart of USD/CAD: [do action=”tradingviews” pair=”USDCAD” interval=”60″/]
Technical lines, from top to bottom:
We begin with resistance at 117.52. This lined marked the start of a rally by the Canadian dollar in February 2007, which saw USD/CAD drop below parity. 1.1640 is next.
1.1494 remains a strong line. It was a key resistance line in November 2006.
1.1333 was tested by the pair for a third straight week. It has some breathing room, with the pair trading close to the 1.12 line.
1.1271 continues to see action and has switched to a resistance role. It is a weak line and could face pressure early in the week.
1.1122 marks the low point of a US dollar rally which started late in October and saw USD/CAD climb above 1.14 earlier in November.
1.1054 remains a strong support line. 1.0944 is next.
1.0815 has held firm since late August. It is the final support line for now.
I remain neutral on USD/CAD
Canadian numbers have shown some improvement, and strong US data is usually good news for the Canadian economy, which is heavily dependent on its southern neighbor. If Canadian GDP meets expectations, the Canadian dollar could get a boost.
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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.
- USD/CAD (loonie), check out the Canadian dollar.
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