USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
- Foreign Securities Purchases: Monday, 13:30. In November, the indicator declined by C$1.75 billion, down from a gain C$11.32 billion a month earlier. Analysts are predicting a rebound in December, with an estimate of C$4.82 billion.
- Manufacturing Sales: Tuesday, 13:30. This key manufacturing indicator has been struggling, with five declines in the past six months. The November reading came in at -0.6%. A much better reading is expected in December, with a forecast of 0.6%.
- CPI: Wednesday, 13:30. CPI should be treated as a market-mover, as it is the primary gauge of consumer inflation. The December release edged up to 0.0%, up from -0.1% a month earlier. The forecast for January stands at 0.3%. Core CPI, which excludes the most volatile items which make up CPI, has posted back-to-back declines. Will we see an improvement in the upcoming release?
- ADP Non-Farm Employment Change: Thursday, 13:30. This private-sector indicator helps analysts track the strength of the labor market. The indicator posted an excellent gain in December, showing that the economy created 46.2 thousand jobs, up from 30.9 thousand a month earlier. We now await the January release.
- Retail Sales: Friday, 13:30. Retail sales jumped 0.9% in November, its strongest gain since March. Analysts expect a much smaller gain for December, with an estimate of 0.1%. The core reading came in at 0.2% in November, shy of the estimate of 0.5%. The forecast for December is 0.4%.
USD/CAD Technical Analysis
Technical lines from top to bottom:
We start with resistance at 1.3660, which held since December 2018. 1.3550 is next.
1.3420 has remained intact since June 2019.
1.3330 has served in a resistance role since early December.
1.3265 has switched to a support role following gains by USD/CAD last week.
1.3150 is the next support level.
1.3100 (mentioned last week) has some breathing room in support.
1.3048 is protecting the symbolic 1.3000 level.
1.2950 is the final support level for now.
I remain bullish on USD/CAD
The Canadian dollar managed to hold its own last week, but is down 2 percent this year. The coronavirus has dampened risk appetite and sent oil prices lower, so the Canadian currency will likely remain under pressure.
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