Browsing: Canadian Dollar Forecast

  • The Canadian Dollar fell to the lower ground with oil but stabilized.
  • A double-feature Friday brings the focus back to Canadian data.
  • The technical picture is slightly bullish for the pair but the experts are only bullish in the short term.

This was the week: Crashing oil, and international trouble

Oil prices suffered a massive plunge on Tuesday, extending previous losses with WTI Crude Oil falling below $55, the lowest since November 2017. The trigger came from a tweet by US President Donald Trump that called on OPEC not to intervene. The cartel considered cutting production by 500,000 barrels per day.

The Canadian Dollar reacted and was pressured to the downside with USD/CAD hitting a high of 1.3263.

After the crash, reports came out that OPEC and other countries were considering a cut of 1.4 million barrels per day, and the news allowed petrol prices to recover. The loonie followed.

US Retail Sales rose by only 0.3% on both the headline and the core figure, slightly below expectations. Inflation also slightly missed by decelerating to 2.1% on Core CPI. Nevertheless, the Fed remains on course to raise rates in December. Fed Chair Jerome Powell acknowledged some headwinds but conveyed a confident message about the economy.

Brexit grabbed the headlines. The European Union and the UK reached a draft withdrawal agreement. The news helped risks assets, the Canadian Dollar among them. However, concerns about the political situation resulted in a fall of the pound and some pressure on risk assets.

Canadian events: Inflation and retail sales Friday, oil remains important

The Bank of Canada publishes its Financial System Review report on Thursday. Apart from the state of the banks, the publication may also shed light on the economic situation and the Bank’s policy.

Top-tier releases are due on Friday. Monthly inflation data for September was weak: with headline CPI falling by 0.4% and core CPI by 0.1%. Nevertheless, yearly figures have been stable with 2.2% on the headline and 1.5% on the core. The data for October may show similar statistics. An acceleration in inflation could push the loonie higher.

Retail sales are released with a delay but undoubtedly matter due to the Canadian consumer’s contribution to the economy. Back in August, the volume of sales slipped by 0.1% while core sales fell by 0.1%. A bounce could be seen in the figures for September.

As in recent weeks, oil prices will continue having an outsized effect on the C$. Headlines coming from Saudi Arabia and Russia regarding oil cutting oil output are likely to swing the loonie.

Here is the Canadian calendar for this week

Canadian economic calendar November 19 23 2018

US events: Durables, housing data, and Thanksgiving

Contrary to the Canadian economic calendar, the American one is lighter, partly due to Thanksgiving on Thursday. Lighter trading volume is also expected on Friday.

Building Permits and Housing Starts kick off the week on Tuesday. The numbers tend to offfest each other. More significant events are scheduled for Wednesday. Durable good orders for October provide a look into Q4 investment data. The Federal Reserve recently noted that investment has “moderated.”. Core figures have a greater impact than the volatile headline figures.

Existing Home Sales are also of importance amid the ongoing slowdown. Sales of homes badly disappointed in September, but this may be attributed to Hurricane Florence.

Trade talks between China and the US are also of importance ahead of the meeting between Presidents Trump and Xi in Buenos Aires at the of the month. Progress in talks could indirectly support the loonie while a clash could weigh on the C$ due to concerns about global trade.

Here are the critical American events from the forex calendar:

US economic calendar November 19 23 2018

USD/CAD Technical Analysis

The USD/CAD is battling the uptrend support line that accompanies it since early October. Momentum remains positive but has eased. The pair continues trading above the 50-day and 200-day Simple Moving Averages. All in all, the technical picture is mostly bullish, but not as strong as it used to be.

Looking up, 1.3225 capped the pair in early September and remains relevant. The recent peak of 1.3260 is the next line to watch. Higher, 1.3295 capped USD/CAD in July. 1.3350 and 1.3380 held the pair down in July.

1.3150 was a low point in mid-November. 1.3050 was a swing low early in the month. Below 1.3000, 1.2970 was a swing low in mid-October and also provided support in August. 1.2920 was a low point in mid-October.

USD CAD Technical Analysis November 19 23 2018

USD/CAD Sentiment

The FXStreet forex poll of experts provides shows a slightly bullish inclination in the upcoming week, a neutral stance in the next month and a bearish bias in the longer-term. However, the targets are all within the 1.3100 handle and the forecasts have not changed much since the previous forecast.

Dollar CAD forecast experts forex November 19 23 2018

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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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