Browsing: Canadian Dollar Forecast

The Canadian dollar had an outstanding week, climbing 1.99 percent. This was its best weekly performance since June. There are no Canadian events this week, so US data will have a magnified effect on the movement of USD/CAD

Canada Manufacturing PMI continued to show expansion, with a reading of 55.5 points. The economy created just 83.6 thousand jobs, down from 378.2 thousand beforehand. The unemployment rate edged down to 8.9%, down from 9.0 percent.

In the US, ISM Manufacturing PMI was stronger than expected. The index climbed from 55.4 to 59.3, above the forecast of 55.6 points. The Federal Reserve didn’t make any changes, but hinted at more easing in December. US nonfarm payrolls slowed to 638 thousand, but exceeded the estimate of 595 thousand. Wage growth remained steady at 0.1%, while the unemployment rate dropped from sharply to 6.9%, down from 7.9%. The Ivey PMI improved to 54.5, up from 54.3 points.

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

USD/CAD Technical Analysis

Technical lines from top to bottom:


With USD/CAD recording strong losses last week, we start at lower levels:

1.3330 (mentioned last week) has some breathing room in resistance.

1.3260 is next.

1.3137 has switched to a resistance role after strong losses by USD/CAD last week.

1.3014 is a weak support level.

1.2936 has held in support since October 2018.

1.2844 is next.

1.2730 is the final support level for now.

I am neutral on USD/CAD

With the US election results finally in, USD/CAD will likely settle down after last week’s huge downward move. It’s a quiet week on the fundamental front, although an unexpected reading from US consumer inflation could shake up the pair.

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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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