Browsing: Canadian Dollar Forecast

USD/CAD Technical Analysis, Canadian dollar forecast ► preview of the key events that move the Canadian dollar (C$) during the upcoming week. Here are some general data. Scroll down for the latest USD/CAD outlook

USD/CAD Characteristics

The Canadian dollar, aka “the loonie” (the loon appears on the 1 dollar coin) is a commodity currency. Oil is Canada’s primary exports and fluctuations in the “black gold” move CAD as well. The C$ also moves with also with stocks, as it is considered a “risk currency”. However, CAD  also depends heavily on demand from its No. 1 trading partner and southern neighbor, the USA. Trump’s trade wars hurt CAD. NAFTA renegotiations are not going anywhere fast.

Dollar/CAD tends to react relatively slowly to important economic data from Canada. Retail traders thus have a better level playing field that can jump into a trade even without the most sophisticated algorithmic tools. Even the Canadian jobs report tends to result in a relatively long move.

USD/C$ technical trading is OK: not choppy and tough, but neither fully respecting lines of support and resistance. Higher market volatility and trading volume make it more predictable.

Dollar/CAD Recent Moves

The Bank of Canada raised rates in two consecutive meetings, pushing the currency higher. However, this short cycle came to screeching halt alongside a slowdown in the economy and worries about inflation.

From the post-hike lows at the 1.20 handle, the pair began a correction phase and topped 1.29. However, the rise in oil prices due to some shortages and some profit taking stabilized the loonie. Another factor to watch is the housing situation in Toronto, Vancouver, and Montreal, which is worrying.

Canadian rate hikes, US demand and the price of oil will continue guiding USD/CAD.

Latest weekly Canadian dollar forecast

Dollar/CAD moved higher as the Canadian dollar suffered from setbacks and as the greenback lifted its head. What’s next? Testimonies from Poloz stand out this week. Here are the highlights and an updated technical analysis for USD/CAD.

The Bank of Canada is somewhat more cautious on the economy, seeing a potential for further growth. This hurt the loonie. Then, the disappointing inflation figures showed that also on this front, there is a lot of progress that needs to be made. Oil prices continued rising and this supported the loonie. In the US, data was mostly positive and the Fed seems keener to raise rates, as Williams made very optimistic noises. Eventually, US yields began moving higher and the USD followed suit. A lot depends on NAFTA as well: negotiations continue in Washington.


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

  1. Wholesale Sales: Monday, 12:30. Sales at the wholesale level serve as an indicator to those at the retail level. After a rise of 0.1% in January, a faster increase of 0.3% is on the cards for February.
  2. Stephen Poloz testifies Monday 19:30 and Wednesday at 20:15. The Governor of the Bank of Canada testifies along Senior Deputy Governor Carolyn Wilkins in front of two separate committees in Parliament. In these two appearances, they will have the opportunity to get into further details about the economic situation and also about their policy. While they both spoke out recently, after the rate decision, this event is longer and also comes out after the inflation and retail sales reports. Commentary about NAFTA and oil will also be of interest.

*All times are GMT

USD/CAD Technical Analysis

Dollar/CAD made another U-turn, this time to the upside. The pair stopped only at the 1.2760 level discussed last week.

Technical lines from top to bottom:

1.3180 was a support line in 2017 and now turns into resistance. 1.3125 is the high point for 2018 so far.

1.30 is a round number that is eyed by many. 1.2945 capped the pair in early April.

1.2810 provided support in late March. 1.2760 was a swing high in late February.

1.2665 was a was a double-bottom in November and works as strong support. It is followed by 1.2615, which provided support in November.

Further below, we find 1.2545, the low point in mid-April. Another round of selling may send the pair towards 1.2450, a swing low in mid-February and 1.2290 is next.

I am bearish on USD/CAD

While the economic data has not been convincing, prices of oil are set to remain elevated. In addition, a deal on NAFTA is getting close and it could boost the Canadian dollar.

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