The Canadian dollar enjoyed a strong week, with a gain of 1.2 percent. USD/CADclosed the week just above the 1.39 level. The upcoming week features three events. Here is an outlook at the highlights and an updated technical analysis for USD/CAD.
Canada continues to record trade deficits. In March, the deficit widened to C$1.4 billion, up from C$1.0 billion a month earlier. Still, this figure easily beat the estimate of C$2.5 billion. Employment numbers were by no means strong, but managed to beat the forecasts. The economy lost some 1.99 million jobs in April, but analysts had projected a loss of 4.0 million. The unemployment rate jumped from 7.8% to 13%. This was lower than the estimate of 18 percent.
In the U.S., factory orders fell by 10.3% in March, after a flat 0.0% reading a month earlier. April job numbers were dismal. Unemployment claims came in at 3.16 million, down from 3.8 million a week earlier. This brings the running total to a staggering 33.4 million. Nonfarm payrolls dropped by a record 20.5 million in April, slightly below the estimate of 22.4 million. The unemployment rate jumped to 14.7%, up from 4.4% a month earlier. Still, this beat the forecast of 16.0 percent. There was some good news, as wage growth shot up 4.7%, crushing the estimate of 0.5 percent.
USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
Manufacturing Sales: Thursday, 12:30. After a nasty streak of five straight declines, manufacturing sales climbed 0.5% in February, above the forecast of 0.0%. Will we see an improvement in the March release?
BoC Financial System Review: Thursday, 14:30. The Bank of Canada publishes its overview of the financial system twice a year. Apart from data about the banks’ situation, the publication also includes economic data. BoC Governor Stephen Poloz will host a follow-up press conference.
Foreign Securities Purchases: Friday, 12:30. The demand for securities by foreigners was much stronger than anticipated in February. The indicator rose to C$20.6 billion, well above the estimate of C$9.0 billion. Will the March release be just as rosy?
USD/CAD Technical Analysis
Technical lines from top to bottom:
We start with resistance at 1.4310.
1.4159 (mentioned last week) has some breathing room in resistance.
1.4019 has switched to a resistance role after strong losses by USD/CAD last week.
The round number of 1.39 has some breathing room in support. 1.3757 is next.
1.3660 has held in support since mid-March, when USD/CAD posted a significant rally.
1.3550 is the final support level for now.
I remain bullish on USD/CAD
The outlook for the Canadian dollar remains negative, despite last week’s strong performance. Economic conditions remain very weak due to Covid-19 and investors are likely to stick with safe-haven assets like the U.S. dollar.
Kenny Fisher - Senior Writer
A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.
Kenny's Google Profile
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.
Share
