USD/CAD Forecast April 8-12 – Canada sheds jobs, but Canadian dollar holds steady

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USD/CAD showed limited activity last week and ended the week with slight gains. There are no major Canadian events in the upcoming week. We’ll get a snapshot of the strength of the housing sector, with the release of housing starts and building permits. The U.S. will release consumer inflation as well and the minutes of the Federal Reserve minutes from the March meeting. Here is an outlook for the highlights of this week and an updated technical analysis for USD/CAD.

U.S. numbers started the week poorly, as retail sales and durable goods orders posted declines and missed their forecasts. On Friday, employment data was mixed. Nonfarm payrolls came in at 196 thousand, easily beating the estimate of 172 thousand in March. Still, this reading was significantly lower than the December and January releases, both of which were above the 300-thousand level. Wage growth dipped to 0.1%, shy of the estimate of 0.3%.

In Canada, Ivey PMI surged in March to 54.3, up from 50.6 in the February release. This points to solid expansion. On the employment front, the economy lost 7200 jobs, its first decline in seven months. The unemployment rate remained pegged at 5.8% for a third straight month.

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

https://www.tradingview.com/x/YmeGqbvn/

  1. Housing Starts: Monday, 12:15. Housing starts have slowed for three successive months, reinforcing concerns about the strength of the housing sector. The February reading of 173 thousand was well below expectations. Better news is expected in March, with an estimate of 193 thousand.
  2. Building Permits: Monday, 12:30. The indicator plunged 5.5% in January, its steepest decline since November 2018. Will we see a rebound in February?
  3. NHPI: Thursday, 12:30. The New Housing Price Index has been very steady. The January reading of -0.1% followed five consecutive readings of 0.0%, pointing to steady house prices. Little change is expected in the February release.

*All times are GMT

USD/CAD Technical Analysis

USD/CAD started the week with losses, but reversed directions and posted gains during the week. The pair tested resistance at 1.3385 (mentioned last week) on Friday.

Technical lines from top to bottom:

1.3757 has held in resistance since May 2017.

1.3660 was the high point for USD/CAD in December.

1.3547 capped USD/CAD in June 2017. Next, 1.3445 was the peak in early December.

1.3385 is next.

1.3350 remained relevant during the week.

Lower, 1.3265 was the high point in mid-November. 1.3225 has held in support since early March.

1.3175 was a swing low in late November.

1.3125 was a low point earlier that month.

1.3048 has provided support since early November.

I remain bullish on USD/CAD

The Canadian economy is showing signs of a slowdown, which means that the BoC will likely maintain rates at this month’s policy meeting. The labor market has been a bright spot in recent months, but the loss of jobs in March could leave investors with a sour taste this week.

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Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.