Browsing: Canadian Dollar Forecast

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

USD/CAD Characteristics

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.

Latest weekly Canadian dollar forecast

Dollar/CAD moved up in a mixed week, trying to find a new direction amid sliding oil prices. Retail sales stand out in the upcoming week. Here are the highlights and an updated technical analysis for USD/CAD.

Canada’s manufacturing sales and foreign securities purchases both beat expectations but the first ADP jobs report showed a drop in jobs. BOC member Wilkins gave acknowledged that they did not expect the strong growth rate is not sustainable. American lawmakers are struggling to pass the tax cuts that they promised. On the other hand, inflation data beat expectations. Canadian inflation data came out as expected and did not impress.

Updates:

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

  1. Wholesale Sales: Tuesday, 13:30. The growth of sales at the wholesale level came out slightly below expectations for the month of August, with +0.5%. This publication has a significant impact and also serves as a warm up to the retail sales report.
  2. Retail sales: Thursday, 13:30. Retail sales are often published alongside the inflation data and do not get the necessary attention. This time is different. Sales slipped by 0.3% in August, badly disappointing. Core retail sales also fell short of the mark with a decrease of 0.7%.
  3. Corporate Profits: Friday, 13:30. After a big fall of 7.4% in the first quarter of 2017, corporate profits ticked up by only 0.1% in Q2, a figure which is usually quite volatile. An increase is on the cards now.

* All times are GMT

USD/CAD Technical Analysis

Dollar/CAD began the week by testing support at 1.2665, mentioned last week. From there is advanced to challenge 1.2770, trading in a perfect range.

Technical lines from top to bottom:

1.3160 provided support back in June. 1.3080 was a line of resistance to the pair in its recovery attempts in July.

1.2920 capped the pair in late October. It is followed by 1.2860 which worked as support back in July.

1.2790 was the high in mid-November and serves as resistance. 1.2665 was a swing high of a move higher in early September. It is followed by 1.26, a round number that worked as resistance in October.

1.2540 capped the pair in early October when it traded in a narrow range. 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.

1.22 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.

I remain bullish on USD/CAD

The loonie was hardly able to take advantage of rising oil prices and suffers their fall. This is a clear bearish sign. There may be more room for the downside on CAD, upside for USD/CAD.

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