USD/CAD has made a big move downwards during May, and bounced off a major support line. It currently stands near an important line. This week features many important figures in Canada, that will determine the loonie’s direction.
Throughout most of 2009, USD/CAD traded above 1.20. It even made a false break above 1.30 in mid-March. Since then, the pair began an easy downtrend, as the US dollar lost ground to all the currencies, since the trillion dollar printing.
Locked between two strong lines
At the beginning of May, USD/CAD broke the 1.20 line. It didn’t stop there, and continued deep under 1.1760, which was the low point in the first week of January.
It did find strong support at 1.1470, which was the low point in mid November. USD/CAD didn’t plunge lower than the 6 month low. This low point was reached on May 8th. Since then, the pair went uphill, closing the week at 1.1774.
So now, at the wake of the new week, the loonie is locked between those two strong lines, and is looking for a direction.
Important figures this week in Canada
After a holiday on Monday, BOC Deputy Governor John Murray will speak on Tuesday. This is a nice warm-up for the bigger events later on.
On Wednesday, Consumer Price Index is published. Canada’s CPI is expected to rise by 0.2%, same as last month. Also Core CPI is predicted to rise modestly, by 0.1%. Expectations are for almost unchanged prices. These non-expectations mean that if there’s a surprise, USD/CAD will shake on this inflation figure.
Oil Prices: The price of oil has risen recently. Canada, being an exporter of oil, is highly affected by the price of oil and also by the Crude Oil Inventories that are published in the US on Wednesday.
On Thursday, Foreign Securities Purchases and Wholesale Sales are released. These will also shake the USD/CAD, but are only a warm-up for Friday.
Canadian Retail Sales are expected to turn positive, while Core Retails Sales are predicted to turn negative. Confused? Also USD/CAD will be confused with this release on Friday. If we add the high volatility on Fridays, you’ll get some interesting moves.
I’m not willing to bet where the USD/CAD will find itself at the end of this important week in Canada… But I do say that it’ll get a new direction, something that will show the way for the next weeks.
For more on this week’s events, check out the Forex Weekly Outlook.