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 gained some ground on the dovish decision by the BOC. Will it continue rising? The BOC has another opportunity to move the markets with a speech by BOC Governor Stephen Poloz.  Here are the highlights and an updated technical analysis for USD/CAD.

The Bank of Canada left the interest rate unchanged at 1% as expected but surprised markets by remaining quite cautious on the outlook. It seems like Poloz and his colleagues in Ottawa are not very keen on raising interest rates in the near future. This certainly hurt the loonie in a week which mostly saw positive figures in the trade balance report, housing figures and more. In the US, the greenback enjoyed the significant progress made on tax cuts while dropping a little on the mixed NFP.

Updates:

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

  1. NHPI: Thursday, 13:30. The New House Price Index rose by 0.2% in September, despite some jitters in some housing markets, notably Vancouver and Toronto. A rise of the same scale is expected also for October.
  2. Stephen Poloz talks: Thursday, 17:25. The Governor of the BOC will deliver an interesting speech in Toronto, titled “Three Things Keeping Me Awake at Night”. Will he lay out deep concerns about lower inflation? He may express some worries and the Canadian dollar could be in a “tin-hat mode”. The text of the speech is released some 15 minutes before he talks.
  3. Manufacturing Sales: Friday, 13:30. This important indicator rose by 0.5% in September. It has a tendency to move the Canadian dollar more than the parallel figure in other countries. This time, an increase of 0.3% is forecast.

: :* All times are GMT

USD/CAD Technical Analysis

Dollar/CAD initially dipped but never went too far. It then took an upswing and reached above 1.2840 (mentioned last week), a bullish sign.

Technical lines from top to bottom:

1.3160 provided support back in June. 1.3020, just above the round level of 1.30, worked as resistance back in July.

1.2920 capped the pair in late October and turned into a double-top in No. It is followed by 1.2840 capped the pair in mid-November and also had a role in the past.

1.2790 was the high in mid-November and serves as resistance. 1.2665 was a was a double-bottom in November and works as strong support.

It is followed by 1.26, a round number that worked as resistance in October. 1.2540 capped the pair in early October when it traded in a narrow range.

1.2435 was a cushion for the pair during the month of October. 1.2335 gave support to the pair in late September.

I remain neutral on USD/CAD

The better than expected data counters the dovishness of the BOC. This trend could continue for a while longer. The Fed is unlikely to rock the boat. All in all, things could remain balanced for yet another week.

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