Dollar/CAD held the same trading ranges once again as the loonie weathered the greenback’s strength amid ongoing NAFTA negotiations. What’s next? Canada’s GDP is eyed. Here are the highlights and an updated technical analysis for USD/CAD.
Canadian PM Justin Trudeau was among the high-ranking officials expressing optimism about a deal on NAFTA, even though a “handshake agreement” between the US and Mexico was denied. Optimism kept the C$ bid.Canadian retail sales slightly disappointed, but it didn’t stop the loonie. In the US, the dollar was hit by Trump’s criticism of the Fed’s rate hikes and also by his legal trouble. On the other hand, the Fed remains hawkish, as seen by the upbeat FOMC meeting minutes.
[do action=”autoupdate” tag=”EURUSDUpdate”/]USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
- Current Account: Wednesday, 12:30. Canada reported a broad current account deficit of 19.5 billion in Q1 and a slightly narrower deficit is likely now. The current account has a broader scope than the trade balance.
- GDP: Thursday, 12:30. Canada publishes GDP growth figures every month rather than on a quarterly basis. However, this publication is for June, concluding the second quarter, making the release more significant than usual. Monthly GDP increased by 0.5% in May and will have likely somewhat slowed down in June.
- RMPI: Friday, 12:30. The Raw Materials Price Index is important for inflation and also for Canada’s exports. A relatively minor increase of 0.5% was seen in June and we could see a similar one in July. The Industrial Product Price Index also rose by 0.5% in June.
*All times are GMT
USD/CAD Technical Analysis
Dollar/CAD had a limited range, hugging the 1.3070 level mentioned last week.
Technical lines from top to bottom:
1.3385 was the peak on two occasions in late June. 1.3350 follows close by after serving in both directions in July 2017.
1.3295 held the pair down in mid-July. 1.3220 capped it earlier in the month.
1.3170 served as resistance in mid-August. 1.3070 was a swing low in mid-July and remains pivotal in late August.
Below 1.3000 we find the mid-August trough of 1.2960. 1.2820 was a low point for USD/CAD in early June and the last line, for now, is 1.2730 which supported the pair in May.
I remain bearish on USD/CAD
Even if a deal is not reached, the ongoing optimism continues supporting the C$. GDP will likely be good enough to keep the loonie bid as well.
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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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