It was another uneventful week for the Canadian dollar as USD/CAD was unchanged. The pair closed the week at the 1.23 line. The upcoming week has just two events, but the GDP release could have a strong effect on the movement of USD/CAD. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.
In the US housing numbers were strong, and the week ended with excellent consumer sentiment data. Still, US Final GDP declined by 0.2%, matching the forecast. There were no Canadian economic releases last week.
[do action=”autoupdate” tag=”USDCADUpdate”/]USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
- RMPI: Monday, 12:30. RMPI is the primary gauge of inflation in the manufacturing sector. The index tends to show a lot of volatility, often leading to readings that are well off the estimates. In April, the indicator bounced back with a sharp gain of 3.8%, easily beating the forecast of 1.7%. Will the indicator repeat with another strong release?
- GDP: Tuesday, 12:30. GDP is one of the most important economic indicators, and traders should treat it as a market-mover. Canada releases GDP on a monthly basis, unlike most other developed economies which publish the indicator each quarter. The indicator has struggled, posting just one gain in 2014. The indicator declined by 0.2% in March, shy of the estimate of +0.2%. The markets are expecting better news in the April report, with an estimate of +0.1%.
* All times are GMT.
USD/CAD Technical Analysis
USD/CAD opened the week at 1.2275 and quickly dropped to a low of 1.2218, testing support at 1.2230 (discussed last week). The pair then reversed directions, climbing to a high of 1.2423. USD/CAD closed the week at 1.2300.
Live chart of USD/CAD: [do action=”tradingviews” pair=”USDCAD” interval=”60″/]
Technical lines, from top to bottom
1.2798 has remained intact since mid-March.
1.2646 is the next resistance line.
1.2541 has provided an important cap in June.
1.2386 remains an immediate support level.
1.2230 was tested in support for a second straight week as USD/CAD softened early in the week before recovering.
1.2114 is a strong support level.
1.1995 is situated just below the symbolic 1.20 level. This line has remained intact since mid-May.
1.1873 is the final support level for now.
I am bullish on USD/CAD
The FOMC may be slightly more hawkish than perceived, as a Fed policymaker spoke of one or even two rate hikes in 2015. If there are further hints about a rate hike, the greenback could jump higher. Over in Canada, GDP has struggled, and a weaker than expected reading could hurt the loonie.
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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.