USD/CAD Technical Analysis, Canadian dollar forecast ► preview of the major events that move the Canadian dollar (loonie) during the upcoming week. Here is some general information. Scroll down for the latest USD/CAD outlook
The Canadian dollar, aka “the loonie” (for the loon on the 1 dollar coin) is a commodity currency. Canada’s primary export is oil and fluctuations in the “black gold” move CAD as well. This also makes it a risk currency, moving not only with crude oil but also with stocks. However, the C$ also depends heavily on US demand, as the southern neighbor is the biggest trading partner. Trump’s trade wars hurt CAD. NAFTA renegotiations are progressing slowly.
Dollar/CAD tends to react relatively slowly to significant Canadian data. This allows a better level playing field for retail traders to jump into the trade even without the latest algorithmic tools. Even the Canadian jobs report tends to result in a relatively long move.
USD/C$ technical trading is OK: not tough and choppy but neither fully respecting lines of support and resistance. Higher volatility makes it more predictable.
Dollar/CAD Recent Moves
The Bank of Canada raised rates in two consecutive meetings, pushing the currency higher. Governor Stephen Poloz also signaled that further hikes are on the cards. This sent the USD/CAD all the way to the 1.20 handle. Nevertheless, the pace could be much slower now.
From the lows, the pair began a correction phase. Economic data was mostly positive in 2017: robust growth and mostly upbeat jobs reports. However, inflation is not rising too fast in Canada, similar to other countries. Only house prices are rising, especially in Toronto and in Vancouver. With ongoing NAFTA talks and a more erratic Trump in October, trade could become a significant factor for the C$ in the last quarter of 2017.
Canadian rate hikes, US demand and the price of oil will continue guiding USD/CAD.