USD/CAD showed some movement but ended the week unchanged from a week earlier. There are three events on the calendar in the upcoming week, including GDP. Here is an outlook for the highlights and an updated technical analysis for USD/CAD.
Manufacturing Sales fell by 0.6% in November, marking a 3-month low. Headline CPI disappointed, with a reading of -0.2%, its first decline in three months. The BoC didn’t make any moves, but the Canadian dollar climbed sharply as BoC Governor Macklem made no hint at a ‘micro-cut’ in rates and investors were relieved. Retail sales shined in November and were much stronger than expected. Headline retail sales came in 1.3%, while the core reading showed a gain of 2.1%.
In the US, the Philly Fed Manufacturing Index climbed to 26.5 in January, up strongly from the previous reading of 11.1 and well above expectations. Unemployment claims dropped to 900 thousand down from 965 thousand and below the forecast of 930 thousand. The week wrapped up with the Manufacturing PMI, which rose to 59.1, up from 56.5. This was its highest level since May 2007 and points to strong expansion.
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USD/CAD daily graph with resistance and support lines on it. Click to enlarge:
- Building Permits: Thursday, 13:30. This construction index rebounded in December, with a strong gain of 12.9%. We now await the January data.
- GDP: Friday, 13:30. Canada releases GDP on a monthly basis. In November, the economy slowed to 0.4% down from 0.8% beforehand. Will we see a rebound in GDP in December?
- RMPI: Friday, 13:30. The Raw Materials Price Index edged up to 0.6% in December, up from 0.5% beforehand. Will the upturn continue in January?
Technical lines from top to bottom:
We start with resistance at 1.3052.
1.2943 switched to resistance at the start of December, when USD/CAD started its slide.
1.2842 is next.
1.2733 is an immediate resistance line.
1.2669 (mentioned last week) is the first support level.
1.2578 is next.
1.2505 is protecting the round number of 1.2500.
1.2422 is the final support level for now.
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I am neutral on USD/CAD
With the US presidential inauguration behind us, the markets will be able to focus on fundamental releases. Investors will be keeping a close eye on GDP releases in both the US and Canada, as well as the FOMC rate statement.
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!
