Canadian Dollar Outlook – November 2-6

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Looking for the latest outlook for this week? Check the full section: USD/CAD Forecast.

After a disappointing GDP result, USD/CAD is far from parity. This week’s employment figures are among the events that will impact the loonie. Here’s an outlook for this week’s Canadian events, and an updated technical analysis for USD/CAD:

USD/CAD Chart with support and resistance lines marked:

USD/CAD Chart

Canadian GDP had many reasons to rise, but it fell. This week’s disappointing GDP result hurt the Canadian dollar. Can employment help it? It did last month. Let’s review the events this week:

  1. John Murray talks: BOC Deputy Governor John Murray will talk about the way that the BOC works, and will probably talk about future policy. Will he add more dovish statement to those in the recent rate decision? Last time, he stated that Canada’s economic recovery isn’t assured. His speech, on Wednesday at 13:05 GMT,  may dovish this time as well.
  2. Building Permits: This major housing indicator has gone mad in recent months: falling by 11.4% and then rising by 7.2%. Building Permits are expected to rise this time in a normal pace of 1.3%. Published on Thursday at 13:30 GMT.
  3. Ivey PMI: The Richard Ivey School of Business releases this highly regarded figure on Thursday at 15:00 GMT. In the past 4 months, his purchasing managers’ index has been above 50, indicating expectations for economic expansion. Last month, this figure was the highest in 14 months, at 61.7 points. It’s predicted to calm down this time, and drop to 60.9 points.
  4. Employment Change: The number of employed people has grown very nicely in the past two months. Last month’s release of 30.6K was 6 times the original expectations. This significantly strengthened the Canadian dollar. This time, the number is expected to be 10.3K.
  5. Unemployment Rate: The twin figure of the employment change was also a huge surprise last month, falling to 8.4%, the lowest in 4 months. This time, it’s expected to remain stable at the same rate. The release of these figures will shake the USD/CAD.

USD/CAD Technical Analysis

The fear that took over this week sent USD/CAD above the 1.0625 resistance line. Even the good GDP from the US didn’t push it back below this line, which served as strong resistance. The pair closes the week under the 1.08 resistance line.

Above 1.08, a strengthening greenback would meet resistance only at 1.1130, a line that was tested twice in the summer. This is a strong resistance line.

Below 1.0625, the Canadian dollar will meet initial support at 1.0400, which was the area it broke into a few weeks ago. It also served as a pivotal line in September and October 2008.

Contrary to last week’s Canadian dollar outlook, I’m not bearish anymore on USD/CAD.

The past week was taken by the greenback, and this trend could continue, hurting the loonie as well. Another month of superb employment figures is needed for the Canadian dollar.

Further reading:

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    About Author

    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 a 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.