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 flipside 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. Trump’s trade wars hurt CAD.

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 with the HCG issue causing a stir. However, the negative mood may have peaked.

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 sparkled last week, as USD/CAD plunged 210 points. The pair closed the week at 1.3509. There are just four events this week. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

Canadian data was mixed, as CPI met expectations but Core Retail Sales disappointed with a second straight decline. Still the Canadian dollar jumped thanks to stronger oil prices. The US dollar was broadly lower as the Trump administration was racked by more scandals. Trump has been accused of interfering in an investigation by FBI director James Comey, raising suspicion of obstruction of justice by Trump. The US dollar fell on market concerns that growth-friendly policies such as tax reform and increased fiscal spending could be stalled. As well, US construction numbers were soft.

Updates:

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

  1. Wholesale Sales: Tuesday, 12:30.  Wholesale Sales is a leading indicator of consumer spending. The indicator posted a decline of 0.2% in February, well off the forecast of 2.1%. Will the indicator rebound in the March release?
  2. BoC Rate Statement: Wednesday, 14:00. The BoC is expected to maintain rates at 0.50%, where they have been pegged since July 2015. A dovish rate statement would likely send the Canadian dollar to lower levels.
  3. Corporate Profits: Thursday, 12:30. Corporate Profits has improved, having posted gains for two consecutive quarters. Will we see another gain in Q1?
  4. BoC Deputy Governor Sylvain Leduc Speaks Thursday, 16:00. Leduc will speak at an event in Toronto. A speech that is more hawkish than expected is bullish for the Canadian dollar.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.3718 and quickly touched a high of 1.3722. Late in the week, the pair touched a low of 1.3505, breaking below support at 1.3457 (discussed last week). USD/CAD closed the week at 1.3509.

Technical lines, from top to bottom

We begin with resistance at the round number of 1.39.
1.3757 is next.

1.3648 has switched to resistance following sharp losses by USD/CAD.

1.3551 is next.

1.3457 was a high point in September 2015.

1.3351 has held in support since mid-April.

1.3212 is next.

1.3083 is the final support level for now.

I am bullish on USD/CAD

The political turmoil in Washington has decreased investor appetite for risk, and this could hurt the Canadian dollar. If oil prices fail to consolidate last week’s gains, the currency could reverse directions.

Our latest podcast is titled Brexit bites the BOE, volatility evaporates

Follow us on Sticher or iTunes

Safe trading!

Further reading:

Get the 5 most predictable currency pairs
1 2 3 42