Canadian Dollar Outlook – June 29 – July 3 2009

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For more on the Australian dollar, read the AUD/USD forecast

USD/CAD went up this week and broke a significant resistance line, before erasing most of its gains. The Canadian dollar will move this week on Canadian GDP, American Non-Farm Payrolls and more Canadian figures. Here’s an outlook for the Canadian dollar, on the turn of the third quarter.

Here are the main events for USD/CAD:

  • Canadian GDP: Recession appears to be long lasting in Canada. Canada is unique in publishing GBP on a monthly basis. On Tuesday at 12:30 GMT, the monthly Gross Domestic Product for April will be released. Also this time, it’s predicted to fall, by 0.1%. This figure could surprise since the second quarter was better than the first.
  • RMPI: The Raw Materials Price Index is a very important figure in Canada’s commodity oriented economy. So the price index gives a good idea of where the economy is going. After falling last month, prices are on the rise – RMPI is predicted to rise by 2% this time.
  • Non-Farm Payrolls: The king of forex impacts all the currencies, and USD/CAD is no exception. After a surprise last time, NFP is predicted to make a small retreat, and fall back to a loss of 375K jobs from -345K). In previous months, the figure showed a loss of above 500K. After last week’s surprise, anything can happen. So, technical barriers might be erased after the release and then respected again. Due to the American Independence Day, NFP is published on Thursday this time. The hour didn’t change: 12:30 GMT.

There are other important American releases this week. I singled out the NFP for its great importance. The loonie will shake also on CB Consumer Confidence on Tuesday, ADP Non-Farm Employment Change,  ISM Manufacturing PMI and Pending Home Sales on Wednesday.

Another note: Canadian banks will be closed on July 1st, Canadian independence day.

Canadian Dollar Technical Outlook

It took USD/CAD a very long time to break the 1.1470 resistance line that I’ve mentioned over and over again. It happened last Monday as the pair went from 1.13 to 1.1550. This was the end of the resistance line. This critical point was a resistance line and a support line in the past.

After breaking the line, it was shattered on Tuesday and Wednesday. The loonie went through it all the time. USD/CAD reached the highs of 1.1637 and fell as low as 1.1420.

Technical analysis for USD/CAD now moves to an uptrend channel. It can be seen in the graph below:

canadian dollar usd cad uptrend channel

This shows that the direction of the Canadian dollar is down. At the closing price of 1.1426, USD/CAD is in the middle of the uptrend channel. The upcoming week’s events will move the pair within the range.

Around the Non-Farm Payrolls publication, the loonie will escape the channel, but this will probably be only temporary. If NFP or the Canadian GDP are very far from expectations, this channel can be really escaped, not falsely.

The Canadian dollar is an interesting pair, though not too easy…

Another technical outlook for the loonie is available on James Chen’s blog.

For a broad look on the week’s events, check out the Forex Weekly Outlook.

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

2 Comments

  1. Antony Francis on

    i have been following up the CAD movements. True CAD is commodity specially Crude supported Currency. when crude picks up CAD goes with it. but what is my worry is that this behaviour is harming the main economy.i donot find any action from the governor. i see in reports that you are more proud of your banking system than managing it to the advantages of the economybetter. rising crude on the weakness of USD will pull along Loonie high to the damaging effect of the strong manufactureing base of Canada. the manufactureing & export industry employing the larger base of canadians will suffer in the long run and the competitive edge in the world market. already country is facing the rising unemployment and that going to take a long time to make a comeback if the loonie is not brought down by togling with the interest rates. my personal assessment is that if the crude is rising above $50 mark the world economy will take long time to recover or to make a come back. the current rate of $70 mark will play up and down movements often without getting a steady growth pattern.

    i wish the central bank of canada govenor replying me back on this. may be he can add or correct me if he wish.

    i wish the best for Canada.

    antony francis

    [email protected]

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