Browsing: Canadian Dollar Forecast

USD/CAD Technical Analysis, Canadian dollar forecast ► review of the major events that move the Canadian dollar (loonie) during the upcoming week. Here is some general information. Scroll down for the latest USD/CAD outlook

USD/CAD Characteristics

The Canadian dollar, aka “the loonie” (for the loon on the back of the coin) is a commodity currency. Canada’s chief export is oil and fluctuations in the “black gold” move the C$ as well. This also makes it a risk currency, moving not only with crude oil but also with stocks. However, the C$ also depends heavily on US demand, as the southern neighbor is the biggest trading partner.

Dollar/CAD tends to react relatively slowly to significant Canadian data. This allows a better level playing field for retail traders to jump into the trade. Even the Canadian jobs report tends to result in a relatively long move.

$/C$ technical trading is OK: not tough and choppy but neither fully respecting lines of support and resistance.

Dollar/CAD Recent Moves

Since the big fall in oil prices in late 2014, Dollar/CAD is trading at higher levels. The Bank of Canada cut interest rates twice. The new government led by Justin Trudeau enacted fiscal stimulus, a rarity in the Western world. This takes some of the burdens off the shoulders of Stephen Poloz, the BOC governor.

The ascendancy of Trump to power boosted USD/CAD. The greenback enjoyed hopes for fiscal stimulus and the Canadian dollar suffered from worries about trade. Yet in 2017, the “Donald Disillusion” has a negative impact on the USD. So, USD/CAD is trading more steadily.

Also, watch out for the worries about elevated housing prices in Vancouver and also in Toronto.

USD/CAD is not moving too far from the 1.30 level, down from the 1.47 peak but way above the near-parity levels.

Latest weekly Canadian dollar forecast

The Canadian dollar showed some movement during the week, but ended the week unchanged. USD/CAD closed the week at 1.3347. This week’s key event is GDP. Here is an outlook on the major market- movers and an updated technical analysis for USD/CAD.

In the US, Fed Chair Yellen missed the chance to boost the US dollar, as she sent out a dovish message after the rate hike. Unemployment Claims were unexpectedly weak, soaring to 261 thousand. Canada’s Core Retail Sales jumped 1.7%, above expectations. However, CPI softened to 0.2%, matching the forecast.

Updates:

USD/CAD daily graph with support and resistance lines on it. Click to enlarge:

  1. BoC Governor Stephen Poloz Speech: Tuesday, 14:10. Poloz will deliver remarks at an event in Oshawa. The markets will be looking for clues regarding the central bank’s future monetary policy.
  2. RMPI: Thursday, 12:30. This index gauges inflation in the manufacturing sector. In January, the indicator softened to 1.7%, above expectations. In December, the index recorded a sharp gain of 6.5%.
  3. GDP: Friday, 12:30. GDP is released on a monthly basis, In December, the economy expanded 0.3%, matching the forecast. The estimate for the January report remains at 0.3%.

* All times are GMT

USD/CAD Technical Analysis

USD/CAD opened the week at 1.3334 and dropped to a low of 1.3260, as support held firm at 1.3212 (discussed last week). The pair then reversed directions and climbed to a high of 1.3409. USD/CAD closed the week at 1.3347.

Technical lines, from top to bottom

1.3782 has held in resistance since the start of February.

1.3648 was an important support level in February.

1.3551 is the next line of resistance.

1.3457 was a high point in September 2015.

1.3351 was tested in resistance and remains a weak line.

1.3212 is providing support. It was a cap in the second quarter of 2016.

1.3124 is the next support level.

1.3003 is protecting the symbolic 1.30 level.

1.2908 is the final support level for now.

I am bullish on USD/CAD

In the US, the Fed has sent clear signals that it is projecting two more rate hikes this year, disappointing the markets. President Trump failed to pass a key health care bill last week and remains embroiled in scandals, which could lessen risk appetite and hurt the Canadian dollar.

Our latest podcast is titled Murky markets and further Fed fallout

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Further reading:

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