USD/CAD made small gains in the past week, and can go anywhere in the upcoming week. 4 important Canadian releases will shape its direction, especially on Friday. Here’s an outlook for this week’s Canadian events, and an updated technical analysis for USD/CAD.
USD/CAD forex chart with support and resistance lines marked inside:
Better than expected Retail Sales helped the loonie advance below 1.08, but the break was false, under the low forex volume in summer. This week’s events are scattered unevenly, but are very important:
- GDP : Canada is unique in publishing a monthly Gross Domestic Product release, rather than a quarterly releases. So, the pain was felt every month. The last time that growth was seen in Canada in December’s release. Last month, the Canadian economy contracted by 0.5%, worse than expected. This time, new hopes of growth are here:.2% for the month of June. Is also Canada showing some recovery in the second quarter? We’ll know on Monday at 12:30 GMT.
- Employment Change: The next Canadian figure is only on Friday, at 11:00 GMT. After posting a big disappointment last month and falling by 44.5K, Canadian jobs are expected to show a smaller loss this time – of 20.3K. This figure tends to be very shaky.
- Unemployment Rate: Published together with the employment change, unemployment rate is predicted to rise to 8.8%. In the past two months, unemployment rate refused to go above 8.6%. We might see a positive surprise also this time. American Non-Farm Payrolls are published an hour and a half later.
- Ivey PMI: Last but not least, the Richard Ivey School of Business releases this important indicator on Friday at 14:00. After crossing the pivotal 50 mark (meaning expansion) last month, this purchasing managers’ index relaxed and leaned back at 51.8. This time it’s predicted to climb up to to 54.3.
This week’s Canadian releases are important, but they aren’t scattered. American releases will dominate USD/CAD during Tuesday, Wednesday and Thursday, when nothing is released from Canada. The pair will shake during Friday, when both countries release the all-important employment figures.
USD/CAD Technical Analysis
The Canadian dollar had a good start of the week, dipping under 1.08 and even reaching 1.0720. As it happens many times with summer trading, this was a false break. USD/CAD jumped back on Tuesday, and reached a peak of 1.1020. It finally closed on 1.0915, about 100 pips higher.
All in all, I stay with my current support line of 1.08 as a pivotal line. In last week’s Canadian dollar outlook, I expected USD/CAD to be locked in a narrow range. Although this range was extended, I regard it as a false break. Below 1.08, 1.0340 is the next line. It’ll be approached only a major collapse of the greenback.
Looking up, 1.1130 is a resistance line that served as such two weeks ago. Above that, a strengthening US dollar will meet major resistance at 1.1470, which worked as both support and resistance in the past.
I’m currently very slightly bullish about this pair, but this isn’t a strong sentiment.
- For a broad view of this week’s major events, read the Forex Weekly Outlook.
- For the British Pound, check out the GBP/USD Outlook.