Browsing: Canadian Dollar Forecast

After a bad week, the Canadian now dollar expects the important employment figures among other indicators. Here’s an outlook for the Canadian events and an updated technical analysis for USD/CAD.

USD/CAD graph with support and resistance lines marked. Click to enlarge:


Canada mostly suffered from risk aversive trading due to the expanding Greek crisis. But on Friday, weak Canadian GDP also contributed to the loonie’s retreat. Fresh data will set its direction. Let’s start:

  1. Building Permits: Published on Thursday at 12:30 GMT. This important indicator leaped 5 months ago, and has been falling short of expectations since then. Two consecutive months of drop will probably be followed with a rise this time – showing that the housing sector is aligning with other factor of the economy.
  2. Ivey PMI: Published on Thursday at 14:00 GMT. The Richard Ivey School of Business’ important index recovered from a drop at the beginning of the year and reached 57.8 points – the highest since October. It’s predicted to edge up to 59.3 points and support the loonie.
  3. John Murray talks: Starts speaking on Friday at 2:00 GMT. A rate hike in Canada is imminent, yet the timing – June 1st or July 20th is still a mystery. BOC Deputy Governor John Murray could shed some light on this issue.
  4. Employment data: Published on Friday at 11:00 GMT. Canada’s job figures disappointed last month – the unemployment rate remained at 8.2% and didn’t drop. Also the employment change number showed a smaller-than-expected rise in jobs. the unemployment rate isn’t expected to move, but a rise of 20.3K jobs that is predicted will probably help the loonie. This can boost  the Canadian dollar in this release – 90 minutes before the American Non-Farm Payrolls.

USD/CAD Technical Analysis

After closing below parity last week, USD/CAD rose above this critical line and made a first test to break the 1.02 line. It then fell towards parity and rose again to close at 1.0176.

The lines haven’t changed since last week’s outlook. The current range of the pair will continue to be 1.0000 to 1.0200. The resistance line at 1.01 is a very minor one. 1.02 was the 2009 low.

Above, 1.03 was a swing high before USD/CAD approached. Above, 1.04 was the bottom border of a long time range and provides strong resistance.

Below parity, 0.98 is the next line of support, being a support line during the last period that the pair was below parity. 0.97 is a stronger line below.

I remain bearish on USD/CAD

Despite the weaker GDP in February, the upcoming rate hike and the overall situation of the Canadian economy continue pointing the direction of the pair.

Further reading:

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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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