Browsing: Canadian Dollar Forecast

USD/CAD parity was closely watched in the past week. Trading around this area will probably continue. Here’s an outlook for the 5 events that will move the loonie, and an updated technical analysis for USD/CAD.

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

canadian dollar forecast

Canadian employment figures disappointed, and prevented USD/CAD to settle below 1.0000. It will be interesting to watch the pair this week. Let’s start:

  1. Housing Starts: Published on Monday at 12:15 GMT. In the past three months, Canadian housing starts exceeded expectations and sent the loonie higher. After reaching 197K, starts are predicted to rise to 201K. This is an important indicator.
  2. BOC Business Outlook Survey: Published on Monday at 14:30 GMT. The Bank of Canada surveys 100 businesses about their economic sentiment. There is no number released, only a written report. Nevertheless, this report is considered a good indicator of the next decisions by the BOC, especially as it’s released only once a quarter.
  3. Trade Balance: Published on Tuesday at 12:30 GMT. Canada’s balance turned positive last month and was also better than expected. The surplus of 800 million will probably be repeated with the same figure. This figure is also released in the US at the same time – making it a very volatile timing for USD/CAD.
  4. NHPI: Published on Tuesday at 12:30 GMT. Just to add more action, this housing figure is released with the Trade Balance. Prices of new homes have risen steadily in the past 7 months. The rise of 0.4% last month will probably be repeated with a 0.5% rise this time.
  5. Manufacturing Sales: Published on Friday at 12:30 GMT. Sales have risen in Canada in the past 5 months, with a strong 2.4% rise last time. This is another indicator for the strength of the Canadian economy. A rise of 1% is expected this time.

USD/CAD Technical Analysis

The Canadian dollar continued to gain against the dollar and reached parity. USD/CAD continued south and reached 0.9977 before retreating up to 1.01 and then closing at 1.0027, lower than last week.

Some lines have been modified since last week’s outlook. The pair currently trades between parity, 1, and last week’s high of 1.01, which is a minor resistance line.

Looking up, the next line of resistance is 1.02, the 2009 low, followed by 1.04, which worked well as a support and resistance line many times in the past. Higher resistance lines are irrelevant now.

Looking down below parity, 0.98 is a minor resistance line, followed by 0.97, which is already a stronger one. Both lines provided support during the previous period that the pair traded below 1.

I continue being bearish on USD/CAD.

Despite the pause in the job market, the loonie enjoys the back of a strong economy, higher oil prices, and an interest rate hike that will come sooner than the American one.

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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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