The Canadian dollar retreated against the greenback after some week figures in Canada. Is this temporary? The calendar is quite light this week, so the focus will lean towards an updated technical analysis of USD/CAD.
Canadian manufacturing sales increased 1.9% indicating economic growth for the first quarter. The manufacturing sector has recovered from its long recession and may cause the BOC to raise rates in July.
- Corporate Profits: Thursday, 13:30. Canadian corporate profits increased to $65.5 billion in the 4th quarter of 2010 rising 7.9% compared to the previous quarter. However this data can be volatile due to global risks and changing commodity prices and exchange rates.
*All times are GMT.
USD/CAD Technical Analysis
The Canadian dollar weakened against the greenback at the beginning of the week, with the pair bouncing off the 0.98 level (mentioned last week). It later made an attempt to push lower, but eventually retreated and closed just under the 0.9750 line.
Technical lines, from top to bottom:
1.02 is a very far line in the distance, but a rise could make it relevant. Still distant and minor resistance appears above parity, at 1.0060. This was the highest level in 2011.
The very round number of USD/CAD parity is the obvious line below, although it isn’t too strong. Under parity, we have two close line – 0.9977, which was a trough in 2010, was also tested at the beginning of March and proved to be significant.
The 2009 low of 0.9930 is just beneath, now weaker than earlier. The area of 0.98 was support earlier in the year and later worked as a pivotal line. It’s stronger resistance now, after capping a recovery attempt.
0.9750 worked twice as a cap for rises in the past weeks, and managed to force a close under it, despite being broken earlier. 0.9667 was a cushion in March and later worked as resistance. This line provided support.
0.96 is a minor support line that played a role recently. More important support is at 0.9520 – it worked as support and also as minor resistance during April.
0.9450 was a double bottom just now and is very important – it’s the new 2011 low. Below this line, we have lines last seen in 2007 – 0.92 is notable, as well as the historic low of 0.9056.
I remain bearish on USD/CAD.
Despite the weak retail sales figure, the Canadian economy is still doing well and has room to rise, especially as oil prices have stabilized.
- 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.