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

USD/CAD reversed directions last week and posted a sharp gain of 170 points. The pair closed the week at 1.3481. This week’s key events are retail sales reports and GDP. Here is an outlook on the major market- movers and an updated technical analysis for USD/CAD.
Last week’s US data was soft. Construction numbers were mixed and manufacturing and employment numbers missed their estimates. In Canada, CPI was unchanged, posting a weak gain of 0.2%.

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

  1. Wholesale Sales: Monday, 12:30. Wholesale Sales soared 3.3% in February, crushing the estimate of 0.3%. Another strong gain is expected in March, with an estimate of 2.1%.
  2. Core Retail Sales: Wednesday, 12:30. This is the first key event of the week. The indicator climbed 1.7% in February, above the forecast of 1.3%. This was the strongest gain in over two years. Will the indicator repeat with another strong performance in March?
  3. Retail Sales: Wednesday, 12:30. Retail Sales is the primary gauge of consumer spending. The indicator bounced back in February with a strong gain of 2.2%, above the estimate of 1.5%.
  4. GDP: Friday, 12:30. GDP, which is released monthly, is one of the most important economic indicators and should be treated as a market-mover. In January, the economy expanded 0.6%, above the forecast of 0.3%. This marked its best showing since June 2016.
  5. RMPI: Friday, 12:30. This manufacturing inflation index continues to soften, and dropped to 1.2% in February. Still, this beat the estimate of 0.8%. Will we see a stronger reading in March?

USD/CAD Technical Analysis

USD/CAD opened the week at 1.3312 and quickly dropped to a low of 1.3260. Late in the week, the pair climbed to a high of 1.3525, as resistance held firm at 1.3551 (discussed last week). USD/CAD closed the week at 1.3481.

Technical lines, from top to bottom

We start with resistance at 1.3859. This line has held since February 2016.

1.3757 is next.

1.3648 was an important support level in February 2017.

1.3551 is the next line of resistance.

1.3457 was a high point in September 2015.

1.3351 remains busy and has switched to a support role.

1.3212 was a cap in the second quarter of 2016.

1.3124 is the final support level for now.

I am bullish on USD/CAD

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