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

Dollar/CAD drifted to new highs but eventually dropped. Is the big correction over? The upcoming week features retail sales among other events. Here are the highlights and an updated technical analysis for USD/CAD.

Falling oil prices weighed on the Canadian dollar early in the week. In Canada, both foreign securities purchases and manufacturing sales missed expectations and this slightly weighed on the loonie. Oil prices also slipped but remained at the higher part of the $40-$50 range on WTI. In the US, the dollar suffered from the relatively dovish meeting minutes and Trump’s troubles. However, the most important US data point was quite good: retail sales beat expectations.

Updates:

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

  1. Retail sales: Tuesday, 12:30. Canadian consumers are buying more than expected, with a solid rise of 0.6% in May. Another rise is expected in June: 0.3%. Core retail sales already show a more mixed picture. The volume slipped by 0.1% after a big rise beforehand and is now estimated to rise by 0.3%.
  2. Wholesale Sales: Tuesday, 12:30. The volume of sales at the wholesale level advanced quite nicely in the past two months, rising by 0.9% in May. Yet another rise is projected: 0.6%.
  3. Corporate Profits: Thursday, 12:30. Profits of big corporations dropped sharply in Q1, by 7.4%, after two consecutive quarters of sharp rises. The volatile index could slide now.

* All times are GMT

USD/CAD Technical Analysis

Dollar/CAD made a break above the 1.27 level (mentioned last week) and reached resistance at 1.2770. Later, the pair dropped to lower ground.

Technical lines from top to bottom:

1.30 is towering above. It is followed by 1.2940 which capped the pair in July.

1.2860 was a relatively significant stepping stone on the way down, holding the pair for some time. It is followed by 1.2775, which marked a recovery attempt.

1.27 is a round number and also the top of a short-lived range. 1.2640 was the bottom of that range and a level where the pair reached after bouncing back.

1.2580 is a pivotal line and capped the pair temporarily on its recovery path. 1.2410 is a very strong line, serving as the low for 2017 (so far).

Further down, we find levels last seen in early 2015. These levels are 1.22 and 1.20.

I am neutral on USD/CAD

The consolidation of the pair has not ended quite yet. The US dollar is weak but the Canadian dollar is still consolidating its previous gains. Oil prices somewhat weigh on the C$. Perhaps another week of grinding the range is needed before the next meaningful move.

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