The markets finally moved! USD/CAD fell well below the resistance line, only to make a comeback on the excellent American NFP figures. This week features important Canadian events that will impact the loonie. Here’s an outlook for the upcoming week and a technical analysis for USD/CAD.
Hee’s the USD/CAD graph:
The most important event for USD/CAD is the double-feature Trade Balance event. American and Canadian trade balance are published at the same time on Wednesday afternoon. Let’s see all the Canadian events:
- Housing Starts: Housing figures are very important for every economy, since they have a long term impact on the economy. Ater dropping for many months, Canadian housing starts began pocking up in the last two months, reaching 141K last time. They’re now expected to remain at this level, but they could also continue upwards. Published on Tuesday at 12:15 GMT.
- Trade Balance: Canada has printed a deficit in its trade balance in the past two months. This time, this deficit is expected to squeeze. A surplus isn’t out of the question. What makes this release special, is that the American Trade Balance is published at the same time, Wednesday 12:30 GMT. It’s a very volatile moment for the USD/CAD.
- NHPI: The New House Price Index is another important housing figure. After falling repeatedly since November, NHPI is expected to remain unchanged this time. It’s somewhat overshadowed by the trade balance release, which is due at the same time.
- Manufacturing Sales: Since manufacturers respond quickly to market demands, their sales figures are important. After plunging by 6% last time, manufacturing sales are expected to stabilize with a drop of 0.2% this time. It’s published on Friday at 12:30 GMT, together with the American CPI.
Those are the main events for the Canadian dollar this week. USD/CAD will naturally move by the FOMC Statement, CPI, Retail Sales, and the Trade Balance in the US.
USD/CAD Technical Analysis
This time, it’s different. The loonie broke the resistance line at 1.08. This time it wasn’t a false break. The pair fell as low as low as 1.0625 during Tuesday. But it slowly recovered, arriving back around 1.08 on Thursday. Friday’s Non-Farm Payrolls sent it up and down in a wild manner, reaching 1.0866 at the peak. It closed back at 1.0808. Quite a roller coaster!
So, we have a new support line this week, 1.0625. Deeper down, 1.0340 remains a veteran support line.
The critical 1.08 line was hit badly this week, and its significance has weakened. Looking up, 1.0930 is still a minor resistance line. 1.1130 is a more significant spot. Although it looks far, 1.1470 is important enough to mention as well.
All in all, the new hopes for recovery in the US could send the dollar upwards. USD/CAD can sure go back uphill.
For a broad view on this week’s events in all the currencies, check out the Forex Weekly Outlook.Get the 5 most predictable currency pairs