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:
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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