The Canadian dollar traded perfectly in a range this week. This week’s Retail Sales, as well as 4 other important events, will set the direction of the loonie. Here’s an outlook for the Canadian events, and a technical analysis for USD/CAD.
USD/CAD forex chart, with major technical hurdles highlighted:
Last week’s lower than expected CPI figures hurt the Canadian dollar, and stopped it from making serious moves, despite a general improvement in Leading Index. Let’s see what’s up this week:
- Retail Sales: This major consumer behavior indicator is published early in the week – on Monday at 12:30 GMT. Canadian Retail Sales saw a surprising strong rise last time, and jumped by 1.2%. This time, they’re expected to remain unchanged. The accompanying figure, Core Retail Sales, is no less important. It rose by 0.7% last time, and it’s predicted to keep rising, but by only 0.2% this time.
- Timothy Lane speaks: Timothy Lane is the deputy governor of the Bank of Canada. This position makes his words important for the loonie. He’ll be speaking about the “Canadian Economy Beyond the Recession”, an interesting speech delivered on Tuesday at 17:00 GMT while there aren’t any other releases.
- Corporate Profits: This wide indicator isn’t common in many countries, and forex traders don’t always know how to digest it. Still, this quarterly release is a good indicator for the state of the Canadian economy. In the last two quarters, it fell by double digits – 11.8% last quarter, and 16.3% beforehand. Published on Wednesday at 12:30 GMT.
- Current Account: This is the difference between imports and exports. Goods are already reflected in the trade balance figure, so this current account figure is important for the services, investments and money transfers. Canadian current account has been negative in the last two quarters, and this deficit is expected to deepen from 9.1 to 11.9 billion. Published on Friday at 12:30 GMT.
- RMPI: The Raw Materials Price Index is important for the Canadian commodity-oriented economy. The recent hike in oil prices won’t be reflected in the upcoming release, since it related to the previous month. After rising by 6.2% last time, RMPI is predicted to fall by 4.9% this time. A better outcome will help the loonie. It’s published on Friday at 12:30 GMT, together with the Current Account.
USD/CAD Technical Analysis
USD/CAD began the week by rising. The greenback had initial gains across the board. This jump met the 1.1130 resistance line, that was mentioned in last week’s Canadian dollar outlook.
Later in the week, the Canadian dollar regained its losses, and USD/CAD fell as low as 1.0760. This drop under the all-important 1.08 support line lasted less than an hour, and the pair bounced back to 1.0809. Forex trading in summer is somewhat fuzzy.
This perfect range trading between existing resistance and support lines reinforced them. Beyond 1.1130, 1.1470 is a far and strong resistance line that served as a both a resistance and support line in the past.
Below 1.08, the next point is 1.0340, which seems very far at the moment, and will be approached only on total collapse of the US dollar.
Similar to other currencies, forex trading in USD/CAD will probably be locked in the range this week.
- For a broad view of the week’s major events, read the Forex Weekly Outlook.
- For the British Pound, check out the GBP/USD Outlook.
- For the Australian dollar, read the Aussie Outlook.
- For the Euro, go for the EUR/USD Outlook.