Dollar/CAD ended the week on higher ground, after being rocked by contradicting Canadian figures. The upcoming week features the all-important GDP numbers. Will the pair continue higher? Here are the highlights and an updated technical analysis for USD/CAD.
Canadian retail sales plunged by 0.8% in December, much worse than expected, and this sent the pair higher. However, inflation is also rising, with 1.7% y/y in January and this sent the pair lower. In the US, the meeting minutes came out slightly more hawkish than predicted, supporting the greenback, but it wasn’t a straight line higher.
[do action=”autoupdate” tag=”EURUSDUpdate”/]USD/CAD daily graph with support and resistance lines on it. Click to enlarge:
- Annual Budget Release: Tuesday, 21:00. The Canadian Department of Finance publishes its annual budget, which includes forecasts for growth and inflation. Higher expectations could boost the loonie.
- RMPI: Wednesday, 13:30. The Raw Materials Price Index is important to Canada due to its exports of oil. The index fell by 0.9% in December and may rise now.
- Current Account: Thursday, 13:30. Canada reported a current account deficit of 19.3 billion in Q3 2017 but the nation usually has deficits. A similar figure is likely now.
- Manufacturing PMI: Thursday, 14:30. Markit’s purchasing managers’ index rose to 55.9 points in January, indicating faster growth in the manufacturing sector. A similar score is likely now.
- Canadian GDP: Friday, 13:30. Canada releases its GDP figures once a month, and this time, the figures are for December, concluding the last quarter and the full year. After a monthly growth rate of 0.4% in November, a more modest rise of 0.1% is on the cards.
All times are GMT
USD/CAD Technical Analysis
Dollar/CAD made a move to the upside but eventually found support at 1.26, mentioned last week.
Technical lines from top to bottom:
1.30 is a round number that is eyed by many. 1.2920 was a triple top in late 2017 and continues serving as resistance.
1.2790 was the high in mid-November and serves as resistance. 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. 1.2540 capped the pair in early October when it traded in a narrow range.
1.25 remains a battleground. 1.2450 served as support in February. 1.2335 gave support to the pair in late September and it worked well in January 2018.
Even lower, 1.2250 cushioned the pair on its fall in February 2018. It is closely followed by 1.22
Strong support only awaits at 1.2070. The round number of 1.20 is next. And below there, only 1.18.
I remain bullish on USD/CAD
The Canadian dollar remains vulenrable to the not-so-great economy. The BOC remains hesitant and the US dollar may tick up a bit more.
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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.
Safe trading!
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