The Canadian dollar posted sharp losses late in the week, as USD/CAD gained about 100 points. The pair closed the week at 1.3167. This week has just three events on the schedule, highlighted by Building Permits. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.
The loonie tumbled on Friday, after awful Canadian job numbers. Canadian Employment Change was abysmal, shedding 31.2 thousand jobs in July, an 8-month low. It was a completely different picture south of the border, as US Nonfarm Payrolls gained 255K jobs, and wage growth also improved.
USD/CAD daily graph with support and resistance lines on it. Click to enlarge:
- Building Permits: Monday, 12:30. This construction indicator has been in trouble, posting three straight declines. In May, the indicator dropped 1.9%, nowhere near the forecast of 2.1%. However, the markets are expecting a strong turnaround in June, with an estimate of +2.7%.
- Housing Starts: Tuesday, 12:15. Housing Starts provide a snapshot of the strength of the housing sector. The indicator improved to 218 thousand in June, marking its best reading since September 2015. The July report is expected to be softer, with the estimate standing at 196 thousand.
- NHPI: Thursday, 12:30. This housing inflation indicator jumped 0.7% in May, well above the estimate of 0.2%. The forecast for June stands at 0.2%.
USD/CAD opened the week at 1.3059 and dropped to a low of 1.2992 late in the week. The indicator then reversed directions and climbed all the way to the 1.32 line, as support held firm at 1.3219 (discussed last week). The pair closed the week at 1.3167.
Live chart of USD/CAD:
Technical lines, from top to bottom
We begin with resistance at 1.3457.
1.3353 is next.
1.3219 was a cap in April.
1.3081 has switched to a resistance line following losses by USD/CAD.
1.2990 held firm as the pair briefly dropped below the 1.30 level.
1.2900 is the next support line.
1.2780 has provided support since late June.
1.2663 is the final support line for now.
I am bullish on USD/CAD
The Canadian economy is struggling, as underscored by weak job data last week. The US is moving in the opposite direction, as the superb payrolls report will likely raise the odds of a rate hike by the Fed before the end of the year.
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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.
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