Browsing: Canadian Dollar Forecast

Dollar/CAD spent most of the week trading in narrow ranges as no news on the trade front helped the loonie stabilize. The upcoming week features only one Canadian event, leaving the market mood as the primary driver of the pair. Here are the highlights and an updated technical analysis for USD/CAD.

Canada’s Foreign Securities Purchases fell somewhat short of expectations but manufacturing sales were on the rise. Oil prices remained on the back foot, putting some pressure on the C$. In the US, Fed Chair Jerome Powell expressed confidence in the US economy and tried not to talk about trade relations, assisting the greenback. US retail sales were marginally better than expected.

Updates:

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

  1. Wholesale Sales: Monday, 12:30. The volume of sales at the wholesale level serves as an indication of future retail sales. A modest increase of 0.1% was seen in April and we may see a better outcome this time.

*All times are GMT

USD/CAD Technical Analysis

Dollar/CAD drifted in range, challenging the 1.3255 level seen last week, eventually returning to the range.

Technical lines from top to bottom:

1.3795 held the pair down in April. 1.3560 capped the pair back in May 2017 and is a high point.

1.3385 was the peak on two occasions in late June. 1.3350 follows close by after serving in both directions in July 2017.

1.3255 was a line of support when the pair traded on high ground in late June. 1.3220 served as resistance for the pair in mid-July.

1.3125 is the high point for 2018 until it was broken. 1.3065 was the high point in May and also earlier in the year.

1.30 is a round number that is eyed by many. 1.2920 capped the pair in late April and early May as well. 1.2820 served as support in early May.

I remain bullish on USD/CAD

Despite the backwind from the BOC, the menace of deteriorating trade relations with the US will likely weigh on the economy and the Canadian dollar.

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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

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