USD/CAD Forecast July 29-August 2 – Canadian dollar falls flat

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USD/CAD posted gains every day last week, as the pair jumped close to 1.0% last week.  This week’s key event is Canadian GDP. Here is an outlook for the highlights and an updated technical analysis for USD/CAD.
With only one Canadian event last week, the focus was on U.S. indicators. Durable goods orders rebounded in June, with a strong gain of 2.0%. This marked the strongest gain since August.
In the U.S., durable goods orders rebounded nicely in June. The headline reading gained 2.0%, crushing the estimate of 0.8%. Core durable goods orders jumped 1.2%, easily beating the estimate of 0.2%. The week wrapped up with Advance GDP for Q2, which dropped to 2.1%. Still, this beat the estimate of 1.8%.

USD/CAD daily chart with support and resistance lines on it. Click to enlarge:

  1. GDP: Wednesday, 12:30. GDP is one of the most important indicators and should be treated as a market-mover. The Canadian reports are released each month. In April, GDP slowed to 0.3%, but managed to beat the estimate of 0.2%. We will now receive the May report.
  2. RMPI: Wednesday, 12:30. The Raw Materials Price Index declined by 2.3% in May, its first decline in six months. Will we see a rebound in the June release?
  3. Manufacturing PMI: Thursday, 13:30. Markit’s purchasing managers’ index for the manufacturing sector has been perched just below the 50-level for three straight months. This points to ongoing stagnation in the manufacturing sector.
  4. Trade Balance: Friday, 12:30. Canada posted a rare trade surplus in May, coming in at C$0.8 billion. This was better than the forecast of C$-1.7B. The trade balance for June is next.

* All times are GMT

USD/CAD Technical Analysis

Technical lines from top to bottom:

We start with resistance at 1.3565.

1.3445 has held in resistance since the first week of June.

This is followed by 1.3385.

1.3350 has held in resistance since mid-June. Next is 1.3265.

1.3175 was breached late in the week for the first time since the last week in June.

1.3125 (mentioned last week) has switched to a support role after USD/CAD posted strong gains last week.

1.3048 has some breathing room in support. 1.2916 is next.

1.2831 has held in support since early October.

1.2729 is the final support level for now.

I am bearish on USD/CAD

The Federal Reserve may be on track to lower interest rates, but the U.S. economy is performing well and sentiment towards the greenback remains strong. With no signs of progress in the U.S-China trade war, risk currencies like the Canadian dollar remain vulnerable.

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Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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