Canadian Dollar -Mar 28- Apr 1

GDP is the major event this week after Canada dived into a political crisis. Here is an outlook on the market movers ahead and an updated technical analysis for USD/CAD.

The Opposition New Democratic Party rejected the budget plan issued by Finance Minster Jim Flaherty last Tuesday even though the budget plan contains items requested by the opposition party. Canada’s Conservative government will not negotiate with opposition parties in order to pass the budget which raises likelihood of a spring election. New Democratic leader Jack Layton said his party could not accept the budget in its present form, and the Liberals and Bloc Quebecois also said they would not support the budget.

USD/CAD daily chart with support and resistance lines marked. Click to enlarge:

1. Jean Boivin speaks: Monday, 15:45. BOC Deputy Governor Jean Boivin is due to speak at the Montreal Chartered Financial Analysts Society, in Calgary. BOC Governing Council members are responsible for setting the nation’s key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy.
2. RMPI: Wednesday, 12:30. Raw Materials Price Index    and Industrial Product Price Index gained low growth score compared with previous months. The Industrial Product Price Index increased by 0.2% in January, while the Raw Materials Price Index rose 0.3% In December the Raw Materials Price Index rode by 4.2% and the Industrial Product Price Index gained 0.8%. Compared with the same month a year earlier, the raw materials index was up 9.6% in January, while the industrial index was up 2.7. Raw Materials Price Index   is expected to climb 2.3% while Industrial Product Price Index is likely to gain 0.7%.
3. GDP  : Thursday, 12:30. The fourth-quarter GDP went above expectations gaining 0.5% following 0.4% increase in the previous month. backed predictions that the Bank of Canada will resume interest annualized GDP growth in the quarter was 3.3 percent. The rise was thanks to a surge in exports and strong consumer spending indicating the economy is gathering momentum. GAP growth is expected to remain 0.5%.

*All times are GMT.

USD/CAD  Technical  Analysis

The pair traded very nervously between the 0.97 and 0.98 lines (mentioned last week) before leaping on the political crisis and closing above 0.9815.

Looking down, 0.98 is the first and close line of support, although its somewhat weaker than beforehand. Apart from it’s recent roles in both directions, it was support also back in 2008. The next cushion is also serious – 0.97. It also served as support back in 2008, when the situation with commodity prices was similar to today’s.

They are followed by 0.96, which is a rather minor line – a stepping stone on the way down in case of huge loonie strength..  The fall to the all time low, back in November 2007, was quite fast – the record was set at 0.9056 – this is still far.

Looking up, first resistance isn’t too close – 0.9930. It now works as resistance. This is the 2010 low and it now works as strong resistance. The next line is another low that the pair made in 2010, 0.9977, and now works as minor resistance.

It’s followed by the distinctive line up the road of USD/CAD parity, although after it was crossed many times, its significance is reduced.  Higher above, 1.0060 is the highest level in the past months and is a minor line of resistance up above parity.

Next is 1.0140, which worked as resistance in December and also as support in several occasions beforehand.  Even higher, 1.0280 also served in both directions, taking the role of resistance in the last encounter. 1.0380 was another resistance line, that capped a break more than once, and is strong resistance

I remain bearish on USD/CAD.

Despite the political crisis currently sweeping Canada, the economic situation is good, and we’ll probably see it in the GDP number. In addition, Carney said over the weekend that commodity prices have a lot of room to rise, providing solid ground for the Canadian dollar, at least at the beginning of the week.

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/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 New Zealand dollar (kiwi), read the  NZD forecast.
• For USD/CAD (loonie), check out the  Canadian dollar.

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GDP is the major event this week after Canada dived into a political crisis. Here is an outlook on the market movers ahead and an updated technical analysis for USD/CAD. The Opposition New Democratic Party rejected the budget plan issued by Finance Minster Jim Flaherty last Tuesday even though the budget plan contains items requested by the opposition party. Canada's Conservative government will not negotiate with opposition parties in order to pass the budget which raises likelihood of a spring election. New Democratic leader Jack Layton said his party could not accept the budget in its present form, and the…