USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
- Manufacturing PMI: Tuesday, 13:30. The Markit’s purchasing managers’ index for the manufacturing sector continues to de-accelerate, as manufacturing has been hit hard by the U.S-China trade war. The PMI has contracted for the past two months, dropping to 49.1 in May.
- Trade Balance: Wednesday, 12:30. Canada continues to record monthly trade deficits. There was good news in May, as the deficit fell to C$1.0 billion, well below the estimate of C$2.8 billion. Will the positive trend continue in June?
- Employment Data: Friday, 12:30. The economy created 27.7 thousand jobs in May, easily beating the estimate of 5.0 thousand. Will June bring more good news? The unemployment rate dropped sharply, to 5.4%, below the estimate of 5.7%.
- Ivey PMI: Friday, 14:30. The index remained unchanged at 55.9 in May, shy of the estimate of 56.2. This points to strong expansion. The forecast for June remains at 56.2.
* All times are GMT
USD/CAD Technical Analysis
Technical lines from top to bottom:
With USD/CAD posting sharp losses, we start at lower levels:
1.3445 (mentioned last week) has some breathing room after strong gains by USD/CAD last week.
1.3385 is next. Close by is 1.3350.
1.3265 switched to a resistance role in mid-June.
1.3175 was a swing low in late November.
1.3125 was a low point earlier in November.
1.3048 has provided support since late October. 1.2916 is next.
1.2831 is next.
1.2729 is the final support level for now.
I remain neutral on USD/CAD
The Canadian dollar is flying, but can the hot streak continue? Tensions in the Persian Gulf are high, and if hostilities break out between the U.S. and Iran, minor currencies like the Canadian dollar could nosedive. The markets will be spending the early part of the week analyzing the results of the G-20 meeting – any progress in the bitter U.S.-China trade spat would likely raise risk appetite and boost the Canadian currency.
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