USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
USD/CAD was almost unchanged last week. There are no releases in the upcoming week. Here is an outlook at the highlights and an updated technical analysis for USD/CAD.
Manufacturing sales plunged 28.5% in April, a new record. This follows a 9.8% drop beforehand, as manufacturing facilities were at limited capacity or shut down due to Covid-19. Consumer inflation bounced back with a 0.3% gain in May, after two straight declines. Still, this missed the forecast of 0.8 percent. Core CPI, which excludes the most volatile items, declined by 0.1 percent. There was positive news on the employment front, as the ADP jobs report indicated that economy added 208.4 thousand jobs in May. The week ended on a sour note, as retail sales plummeted 26.4% in April. The forecast stood at 15.0 percent. The core read declined by 22.0%, compared to the estimate of -12.7 percent.
In the U.S., May retail sales crushed the forecasts, raising hopes that the U.S. economy is on the mend. The headline figure bounced back with a sparkling gain of 17.7%, after a decline of 16.4% a month earlier. The estimate stood at 7.9 percent. The core reading jumped 12.4%, well above the gain of 5.5 percent. In April, core retail sales declined by 17.2 percent.
Federal Reserve Chair Powell had a grim message for Congress, warning that the U.S. economy was in the midst of a deep downturn, with “significant uncertainty” about how long an economic recovery would take. Powell added that he did not expect a full recovery until the public was convinced that Covid-19 had been contained. Jobless claims showed little movement last week, with a gain of 1.5 million. This was higher than the forecast of 1.3 million.
USD/CAD Technical Analysis
Technical lines from top to bottom:
The round number of 1.39 has been a resistance line since late May. 1.3757 is next.
1.3661 (mentioned last week) has some room in resistance.
1.3550 is providing support.
1.3420 is next.
1.3330 was tested last week, for the first time since March.
1.3265 is the final support level for now.
I am neutral on USD/CAD
The Canadian economy has been hit hard by Corvid-19 and is very dependent on the U.S. economy, which is also struggling. As a minor currency, the Canadian dollar remains vulnerable due to the severe economic conditions. Still, the currency is up 3.1% against the U.S. dollar in the second quarter.
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!
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