Dollar/CAD turned around once again and it seems that the comeback of the Canadian dollar is over. The upcoming week features the all-important jobs report and a few other figures. Here are the highlights and an updated technical analysis for USD/CAD.
Canada’s GDP shrank in January 2018, the first monthly drop in a year. This came in stark contrast to the upgrade in US Q4 2017 growth, at 2.9% annualized according to the final figure. NAFTA negotiations saw further advances but the good news was already priced in. Oil prices stalled after gaining earlier.
[do action=”autoupdate” tag=”EURUSDUpdate”/]USD/CAD daily graph with support and resistance lines on it. Click to enlarge:
- Manufacturing PMI: Monday, 13:30. Markit’s gauge of Canada’s manufacturing sector increased to 55.6 points in February. A similar score is likely now.
- Trade Balance: Thursday, 12:30. Canada’s trade deficit squeezed to C$1.9 billion in January, beating expectations. A fresh widening is expected for February: 2.1 billion.
- Canadian jobs report Friday, 12:30. Canada finally had a “normal” jobs report in February, a gain of 15.4K jobs after a crash in January and two huge jumps beforehand. Expectations for March stand at a gain of 20.3K, another healthy and normal rise. The unemployment rate is expected to remain unchanged at 5.8%. Note that the composition of jobs, between full-time and part-time, also moves markets, which want to see more full-time positions.
- Ivey PMI: Friday, 14:00. The Richard Ivey Business School reported a high level of economic activity in February, with a score of 59.6 points. A small increase to 60.2 points is on the cards now.
All times are GMT
USD/CAD Technical Analysis
Dollar/CAD initially dropped to lower ground, hitting 1.2810, just above the 1.2790 level discussed last week. It then turned up, closing the week closer to 1.29.
Technical lines from top to bottom:
1.3180 was a support line in 2017 and now turns into resistance. 1.3125 is the high point for 2018 so far.
1.30 is a round number that is eyed by many. 1.2920 was a triple top in late 2017 and switches positions.
1.2810 provided support in late March. 1.2760 was a swing high in late February.
1.2665 was a was a double-bottom in November and works as strong support. It is followed by 1.26, a round number that worked as resistance in October.
I am bullish on USD/CAD
The good news is already priced into the Canadian dollar and not all the good news is priced into the US dollar. The rise could continue.
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Further reading:
- EUR/USD forecast – for everything related to the euro.
- GBP/USD forecast – Pound/dollar predictions
- USD/JPY forecast – analysis for dollar/yen
- AUD/USD forecast – projections for the Aussie dollar.
- Forex weekly forecast – Outlook for the major events of the week.
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