USD/CAD showed slight losses in the first trading week of 2021. There is just one event on the calendar in the upcoming week. Here is an outlook for the highlights and an updated technical analysis for USD/CAD.
The Canadian dollar was flat on Friday as both Canada and the US posted dismal job numbers for December. The Canadian economy showed a loss of 62.5 thousand jobs, the first decline since April. The unemployment rate ticked up to 8.6%, up from 8.7%. Earlier in the week, Canada Manufacturing PMI improved from 55.8 to 57.9, all all-time record high. However, Ivey PMI was a major disappointment, falling from 52.7 to 46.7. A reading below the neutral 50 level indicates contraction.
In the US, ISM PMIs reports pointed to accelerated expansion in December. Manufacturing PMI improved to 60.7, up from 57.5 beforehand. This beat expectations and was the highest reading since August 2018. Services PMI climbed to 57.2, up from 55.9 beforehand. This exceeded the estimate of 54.5 points.
Nonfarm payrolls was dreadful, with a sharp loss of 140 thousand. The consensus estimate called for a gain of 60 thousand. There was better news from wage growth, which jumped 0.8%, up from 0.3% a month earlier. This was the strongest gain since April.
USD/CAD daily graph with resistance and support lines on it. Click to enlarge:
- BOC Business Outlook Survey: Monday, 14:30. This well-respected survey looks at a wide range of business conditions, including spending and hiring expectations. It should be treated as a market-mover.
Technical lines from top to bottom:
We start with resistance at 1.3046.
1.2938 switched to resistance at the start of December, when USD/CAD started its slide.
1.2833 is next.
1.2768 (mentioned last week) saw action early last week.
1.2669 is under pressure in support.
1.2578 is next.
1.2505 is protecting the round number of 1.2500.
1.2291 is the final support level for now.
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I am neutral on USD/CAD
Both Canada and the US posted weak job numbers, and the Canadian dollar responded by remaining flat on Friday. The US dollar has stabilized, but any gains this week will likely be limited.
Further reading:
- EUR/USD forecast – for everything related to the euro.
- GBP/USD forecast – Pound/dollar projections.
- AUD/USD forecast – analysis for the Aussie dollar.
- USD/CAD forecast – Canadian dollar predictions.
- Forex+ weekly forecast – Outlook for the major events of the week.
Safe trading!
