In Canada, Housing Starts exploded with a gain of 335 thousand in March, up from 246 thousand. CPI remained steady at 0.5%, just shy of the forecast of 0.6%. The Bank of Canada tapered its QE from C$4 billion to C$3 billion, becoming the first G-7 bank to tighten policy since the Covid-19 pandemic began.
In the US, unemployment claims dropped for a second straight week to 547 thousand, down from 576 thousand beforehand. Manufacturing PMI in March improved to 60.6, up from 59.0. A reading above the 50-neutral level points to growth.
USD/CAD daily graph with resistance and support lines on it. Click to enlarge:
- Retail Sales Report: Wednesday, 12:30. Consumer spending has been sputtering, with back-to-back declines. Analysts are braced for another decline in February, with a forecast of -3.0% for the headline read and -2.6% for Core Retail Sales.
- GDP: Friday, 12:30. Canada releases GDP on a monthly basis. The economy expanded by 0.7% in January and the estimate for February stands at 0.9%.
- Raw Materials Price Index: Friday, 12:30. This inflation index measures inflation in the manufacturing sector. The index jumped to 6.6% in February, up from 5.7%. Will the upturn continue in March?
Technical lines from top to bottom:
We start with resistance at 1.2750.
1.2640 (mentioned last week) was tested at the end of March.
1.2538 is next.
1.2446 is an immediate resistance line.
1.2371 is the first support level.
1.2294 has provided support since February 2019.
1.2181 is the final line for now.
I am neutral on USD/CAD
The Canadian economy is recovering, and the slight taper by the Bank of Canada is a vote of confidence in the economy. However, the economy continues to grapple with Covid and ongoing lockdowns are weighing on the economy.
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