USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
- Foreign Securities Purchases: Tuesday, 12:30. The indicator provides insights into the flows of funds in and out of the economy. The deficit ballooned to C$12.8 billion April. We will now receive data for May.
- Inflation: Wednesday, 12:30. Headline Consumer Price Index (CPI) remained steady at 0.4% in May. Core CPI, which removes the most volatile items in CPI, also posted a gain of 0.4%. However, other measures of Core CPI, the Trimmed, Media, and Common, were much stronger, with readings near 2.0%. We will now get data for June.
- Manufacturing Sales: Wednesday, 12:30. Sales at the manufacturing level are an important gauge of the health of manufacturing. The May release was a disappointment, with a decline of 0.6%. This was much lower than the estimate of a 0.6% gain.
- ADP Nonfarm Employment Change: Thursday, 12:30. After a positive streak of four straight gains, the ADP indicator found that the economy shed 16.0 thousand jobs in May. Will we see a rebound in the June release?
- Retail Sales Data: Friday, 12:30. The headline and core releases have both shown sharp swings in recent months. Retail sales slowed to only 0.1% in April, down from 1.1% a month earlier. Core retail sales also fell to 0.1% in April, short of the estimate of 0.6%. Will we see stronger numbers in May?
* All times are GMT
USD/CAD Technical Analysis
Technical lines from top to bottom:
We start with resistance at 1.3445. 1.3385 is next.
1.3350 has held in resistance since mid-June. This is followed by 1.3265.
1.3175 was a swing low in late November.
1.3125 was a low point earlier in November
The pair broke through support at 1.3048 (mentioned last week) late in the week. 1.2916 is next.
1.2831 has held in support since early October. 1.2729 follows.
1.2654 is the final support level for now.
I am neutral on USD/CAD
The Fed appears poised to lower rates later in July. Although such a move has been priced in, the greenback could still lose ground after a rate cut. At the same time, the U.S economy remains in good shape and the Canadian dollar is vulnerable to trade tensions, such as the U.S-China trade war.
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