USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
The Canadian dollar rebounded last week, as USD/CAD fell by 1.7 percent. There are four events in the upcoming week, including the BoC rate decision. Here is an outlook at the highlights and an updated technical analysis for USD/CAD.
Canadian employment numbers were a disaster last week. The economy lost over 1.01 million jobs in March, as the shutdown of much of the economy caused mass layoffs. This was much higher than the forecast of a drop of 427 thousand. The unemployment rate jumped to 7.8%, up sharply from 5.6%. Ivey PMI, an important barometer of economic growth, plunged to 26.0 in March, down from 54.1 points.
In the U.S., unemployment claims hit a shocking level for a second straight week, hitting 6.60 million. This was higher than the estimate of 5.0 million. The week ended on a sour note, as consumer inflation declined by 0.4% in March, the first decline since December 2018. Core CPI fell by 0.1%, after a gain of 0.2% a month earlier.
- BoC Rate Decision: Wednesday, 14:00. The BoC made another rate cut at an unscheduled emergency cut. The bank slashed rates from 0.75% to 0.25%, as policymakers try to stabilize the economy which has been hit hard by the Corvid-19 outbreak. The BoC is expected to maintain rates at the upcoming meeting.
- Manufacturing Sales: Thursday, 12:30. Manufacturing sales fell by 0.2% in January, marking a fifth straight decline. Will we see an improvement in the February data?
- ADP Non-Farm Employment Change: Thursday, 12:30. The economy created 7.2 thousand in February, down from 25.9 thousand a month earlier. We will now receive the March data.
- Foreign Securities Purchases: Friday, 12:30. Foreigners snapped up Canadian securities in January, which climbed to C$17.01 billion. This followed two successive declines. Will the upswing increase in February?
USD/CAD Technical Analysis
Technical lines from top to bottom:
We start with resistance at 1.4310.
1.4159 (mentioned last week) has some breathing room in resistance.
1.4019 has switched to a resistance role after USD/CAD lost ground.
The round number of 1.39 is a weak support line. 1.3757 is next.
1.3660 is the final support level for now.
I remain bullish on USD/CAD
The outlook for the Canadian dollar is bearish, as oil prices remain low and the economic fallout from COVID-19 has paralyzed the Canadian economy, which is extremely dependent on the U.S. and global trade.
Further reading:
- EUR/USD forecast – for everything related to the euro.
- GBP/USD forecast – Pound/dollar projections.
- AUD/USD forecast – analysis for the Aussie dollar.
- USD/CAD forecast – Canadian dollar predictions.
- Forex+ weekly forecast – Outlook for the major events of the week.
Safe trading!
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