USD/CAD rose by 150 pips last week, but bounced at the critical 1.1470 mark. On the eve of a new trading week, USD/CAD stands at 1.1350. This week’s FOMC Statement and two Canadian events, Foreign Securities Purchases and a speech by Mark Carney will determine the direction of the loonie. Will it break the huge resistance line? Will it tumble down? Canadian dollar outlook for the fourth week of June.
Economic Indicators for USD/CAD
- Foreign Securities Purchases: This measures the amount of money that’s invested in the Canadian economy by foreigners. This figure surprised in previous months, indicating trust in the stability of the Canadian economy and the Canadian dollar. Last time, it stood on 6.85B. This time, it’s expected to squeeze to 4.27B, and could surprise. This indicator is published on Monday at 12:30 GMT. The timing, at the beginning of the forex trading week and when no American indicator is published, makes this release very important for the loonie.
- Mark Carney Speech: Bank of Canada governor Mark Carney will fly to Washington DC, and talk about the Canadian experience regarding the stability of the banking system. This speech will impact the USD/CAD. He’ll talk on Tuesday at 12:30 GMT, before the first American indicator is published – Existing Home Sales.
- FOMC Statement: Though not a Canadian indicator, a statement by Ben Bernanke’s Federal Reserve will shake the whole market, and the loonie is no exception. He might hint that interest rate hikes are possible sooner than later or follow the BOC up north and declare that no hikes will happen in 2009. The statement, at the end of a two-day meeting, is the highlight of this week in the forex market.
Iran is also in fundamentals 🙂 The ongoing and escalating crisis in Iran, following the elections, ignites fears that might strengthen the US dollar, on the expense of the Canadian dollar.
USD/CAD Technical Outlook
The major resistance line that I pointed out in last week’s Canadian dollar outlook hasn’t changed. In fact, it was tested and withstood the test – something that makes it stronger. I’m talking about the 1.1470 line, which served as a strong support line in the near past and a strong resistance line in the fall of last year.
Last Tuesday, June 15th, USD/CAD reached 1.1450 before bouncing back, and finally closing at 1.1350.
Looking down, a strengthening of the Canadian currency could meet a minor support line at 1.1250 (which served as a minor resistance line last week). Further below, 1.0940 serves as another minor support line. 1.08 is a major support line. This area will be reached only if the FOMC Statement will be very dovish, as the FOMC Statement on March 18th was, with the trillion dollar printing scheme.
Do you think that USD/CAD will break above 1.1470? Or is it set to plunge towards parity?
Anyway, for more on this week’s events, read the Forex Weekly Outlook.
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