Rate decision, housing data and trade balance are the main events for Forex traders this week. Here is an outlook on the major events in Canada and updated technical analysis for USD/CAD. USD/CAD daily chart with support and resistance lines marked. Click to enlarge: Canada’s economy slowed more than expected in the third quarter due to a strong currency causing a contraction in exports and an increase in imports, giving the central bank more reason to keep interest rates unchanged into next year. Will this decline continue next year? Building Permits: Monday, 13:30. Application for Building Permits rose 15.3% in September, indicating recovery in the construction sector following 9.5% drop in August. This rise was 23.9% higher than year ago and was also above expectations as analysts predicted only 2.5% increase. This time 6.7% rise is predicted. Ivey PMI: Monday: 15:00. Canada’s Ivey purchasing managers’ index fell to 56.7 in October significantly more than 69.7 expected. This plunge followed 70.3 in September. This figure is still above the 50.0 point line indicating expansion nevertheless it is a drastic drop. A modest rise to 59.3 is expected now. Rate Decision: Tuesday, 14:00. Bank of Canada kept benchmark interest rate at 1 per cent after three consecutive increases. Raising Canadian rates further while the U.S. Federal Reserve has not started tightening could cause a rapid spike in the dollar, which would make Canadian products less attractive to foreign buyers. In the previous Rate Statement the BOC released its concerns that Canada is dragged down by a U.S. recovery that will be weaker than expected, a global turnaround that is “entering a new phase” is filled with uncertainty, and causes retrenchment by Canadian consumers. An interest hike is unlikely to occur. Housing Starts: Wednesday, 13:15. Housing starts fell more than expected in October declining 9.2 percent to a seasonally adjusted annual pace of 167,900 from a revised 185,000 in September. The Bank of Canada said that housing will be a hindrance in economic growth next year, after several temporary stimulus measures for homeowners failed. A rise of 173K is forecasted this month. NHPI: Thursday, 13:30. The price of a new house increased 0.2% in September up 2.7% from the previous year but worse than 0.3% expected by analysts. The New Housing Price Index (NHPI) measures changes over time in the selling prices of new residential houses agreed upon between the contractor and the buyer at the time of the signing of the contract. Trade Balance: Friday, 13:30. Trade Balance or International Merchandise Trade increased deficit to $2.49 Billion following 1.49 Billion in the previous month worse than the predicted deficit of 1.6 billion. Increasing imports of automotive products, and industrial goods and materials were the main factors behind the decline while exports of machinery and equipment increased. Deficit is predicted to narrow by 0.5B to 2.0B which is encouraging for the Canadian economy. * All times are GMT. USD/CAD Technical Analysis During most of the week, USD/CAD traded in the 1.0070 to 1.0265 range seen last week as well. Friday brought extraordinary action, that saw a drop to the lower range – parity to 1.0070. Looking down, USD/CAD parity is a very round number and it also provided support in the past week. Just under this line, 0.9975 cushioned the pair’s fall in the past two months and now works as support. It’s immediately followed by the year-to-date low of 0.9930. Further lines below were last seen in 2008: 0.98 and 0.97. Reaching these levels depends a lot on oil prices. Looking up, 1.0070 proved to be both a strong support line and then a resistance line. Above, 1.0265 was a very strong resistance line recently and is the next resistance level. Higher, the 1.0380 line is a very strong resistance line after stopping USD/CAD from rising several times in recent months, and is still far. The next line is 1.05 which capped the pair twice during the summer and is the next significant resistance line. Even higher, the strong 1.0680 worked as resistance in July and in August, for more than one day in each attempt to break higher. The next levels are still far – 1.0750 was a swing high during May and also the limit of a long-term range in 2009. The last line is, 1.0850, which was also a swing high in May. I continue being bearish on USD/CAD. The upside of employment figures was a drop in unemployment, which is in sharp contrast to the US. Together with higher oil prices, the loonie can win parity. 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. Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.. Anat Dror Anat Dror Anat Dror Senior Writer I conceptualize, design and create multi-lingual websites. Apart from the technical work, my projects usually consist of writing content for these sites in English, French and Hebrew. In the past, I have built, managed and marketed an e-learning center for language studies, including moderating a live community of students. I've also worked as a community organizer Anat's Google Profile View All Post By Anat Dror Canadian Dollar Forecast share Read Next Bernanke To Boost EUR/USD? Yohay Elam 12 years Rate decision, housing data and trade balance are the main events for Forex traders this week. Here is an outlook on the major events in Canada and updated technical analysis for USD/CAD. USD/CAD daily chart with support and resistance lines marked. Click to enlarge: Canada's economy slowed more than expected in the third quarter due to a strong currency causing a contraction in exports and an increase in imports, giving the central bank more reason to keep interest rates unchanged into next year. Will this decline continue next year? Building Permits: Monday, 13:30. 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