The battle for parity will continue in the upcoming week, as Canadian GDP will be published together with the same American figure. Here’s an outlook for the Canadian events and an updated technical analysis for USD/CAD.
USD/CAD chart with support and resistance lines marked. Click to enlarge:
The Canadian dollar had an exciting week. The BOC made it clear that a rate hike is coming, but Friday’s weak CPI and retail sales prevented the loonie from winning the week. The governor of the BOC, Mark Carney, will continue moving the loonie this week:
- Mark Carney talks: Carney testifies in parliament in two sessions – on Tuesday at 19:30 GMT and on Thursday at 14:30 GMT. In these sessions, Carney will make an overview of the economic situation, and may give some more hints about the imminent rate decision. The big question is if it will come as soon as June 1st, or on the next meeting scheduled for July 20th.
- GDP: Published on Friday at 12:30 GMT. Canada is unique with a publication of the GDP on a monthly basis. January saw a grow rate of 0.6%, which is quite strong, and February is expected to be slightly slower – 0.5%. We will probably continue seeing Canada continue the strong growth of Q4 well into 2010. This will rock the loonie.
- RMPI: Published on Friday at 12:30 GMT, and overshadowed by the GDP release. The Raw Materials Price Index is an important indicator for Canada’s commodity oriented economy. Last month saw a surprising rise of 0.4% in prices. A stronger rise is expected this time – 0.%.
USD/CAD Technical Analysis
The pair began the week with a climb to test the 1.02 resistance line. It proved strong – USD/CAD fell quickly below parity, reaching a new low at 0.9930. It then made another move above parity, but finally closed at 0.9988 – the first weekly close under 1.
The lines haven’t changed since last week’s outlook. Parity continues to be the pivotal point for the pair. Above, 1.01 is a minor resistance line, working as such in recent weeks. 1.02 is already a very strong line – the 2009 low worked as a strong support line.
Above, 1.03 is another minor support line, and it’s followed by 1.04 – being the bottom line of the long-term range.
Looking down, the first significant resistance line is at 0.98, which was a support line during the last time that the pair was trading lower. It’s followed by 0.97, which is a stronger line of support.
I remain bearish on USD/CAD.
The upcoming rate hike, together with improving jobs, rising oil prices, a growing economy and the symbolic weekly close under parity should all help the pair continue lower.
- For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
- For the Euro, read the EUR USD Forecast.
- For the British Pound, look into the GBP/USD forecast.
- For the Australian dollar, read the AUD/USD forecast.
- For USD/CAD, check out the Canadian dollar forecast.
- For the kiwi, here’s the NZD/USD forecast.
Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.