Browsing: Canadian Dollar Forecast

USD/CAD Technical Analysis, Canadian dollar forecast ► review 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

USD/CAD Characteristics

The Canadian dollar, aka “the loonie” (for the loon on the flipside of the coin) is a commodity currency. Canada’s chief export is oil and fluctuations in the “black gold” move the C$ 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.

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 the Canadian jobs report tends to result in a relatively long move.

$/C$ technical trading is OK: not tough and choppy but neither fully respecting lines of support and resistance.

Dollar/CAD Recent Moves

Since the big fall in oil prices in late 2014, Dollar/CAD is trading at higher levels. The Bank of Canada cut interest rates twice. The new government led by Justin Trudeau enacted fiscal stimulus, a rarity in the Western world. This takes some of the burdens off the shoulders of Stephen Poloz, the BOC governor.

The ascendancy of Trump to power boosted USD/CAD. The greenback enjoyed hopes for fiscal stimulus and the Canadian dollar suffered from worries about trade. Yet in 2017, the “Donald Disillusion” has a negative impact on the USD. So, USD/CAD is trading more steadily.

Also, watch out for the worries about elevated housing prices in Vancouver and also in Toronto with the HCG issue causing a stir. However, the negative mood may have peaked.

USD/CAD is not moving too far from the 1.30 level, down from the 1.47 peak but way above the near-parity levels.

Latest weekly Canadian dollar forecast

Dollar/CAD had an interesting week, moving on both Canadian data and on the Fed decision. The upcoming week features the GDP release. Here are the highlights and an updated technical analysis for USD/CAD.

Canadian manufacturing sales dropped by 2.6%, more than expected, but wholesales sales advanced by 1.5%. Oil prices helped the loonie while a relatively hawkish Fed gave a boost to the greenback. All in all, the pair moved a bit higher, but still seems to be in a phase of consolidation.

Updates:

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

  1. GDP: Friday, 12:30. The Canadian economy is looking good. It grew by an annualized rate of 4.5% in the second quarter of 2017 and 0.3% in June. The figure for July, released now, provides the first look into the third quarter.
  2. RMPI: Friday, 12:30. The Raw Materials Price Index has been falling in the past few months, with a disappointing drop of 0.6% in July. Nevertheless, the Canadian economy is not only about raw materials.

* All times are GMT

USD/CAD Technical Analysis

Dollar/CAD broke above 1.22 (mentioned last week) and held its ground.

Technical lines from top to bottom:

1.27 is a round number and also the top of a short-lived range. 1.2640 was the bottom of that range and a level where the pair reached after bouncing back.

1.2580 is a pivotal line and capped the pair temporarily on its recovery path. 1.25, a very round number, provided support for the pair in August.

1.2410 held the pair cushioned for some time but was eventually broken. 1.22 is a round number and also worked as support a few years ago.

1.2065 is the (current) swing low of September 2017. It is followed by the obvious level of 1.20.

Below 1.20, we find 1.1925.a place of support as it worked as such in early 2015. Below that point, we see 1.17.

I am bearish on USD/CAD

With robust economic data and a hesitant Fed, the pair has room to the downside.

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