USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
The Canadian dollar lost ground for a second straight week, as USD/CAD pushed above the 1.32 level. There is only one Canadian event on the schedule, so U.S. consumer inflation and retail sales will likely have a magnified effect on the movement of the pair. Here is an outlook at the highlights and an updated technical analysis for USD/CAD.
On Friday, Canadian employment change disappointed in October, as the economy lost 1.8 thousand jobs. The forecast stood at 14.7 thousand jobs. The unemployment rate remained steady at 5.5%. There was more bad news from the construction front, as Building Permits declined by 6.5%, a 4-month low. This reading was well short of the estimate of -1.9%. These weak numbers pushed the Canadian dollar lower on Friday.
U.S. Services PMI continued to point to expansion, as it improved to 54.7, above the estimate of 53.5 points. The UoM Consumer Sentiment index dipped to 95.7, shy of the forecast of 97.0 points. There was a significant development on the trade front, as a Chinese report stated that the U.S. and China had agreed to phase out tariffs. However, no timetable was given.
- Foreign Securities Purchases: Tuesday, 13:30. Foreigners purchased C$4.99 billion in August, after recording two declines. This beat the estimate of C$-1.80 billion. Will we see a stronger reading in September?
USD/CAD Technical Analysis
Technical lines from top to bottom:
We start with resistance at 1.3565.
1.3445 has remained intact since the first week of June. 1.3385 is next.
1.3330 has held since early September.
1.3265 is an immediate resistance line.
1.3150 is providing support.
1.3100 has some breathing room after USD/CAD posted gains last week.
1.3048 (mentioned last week) is protecting the round number of 1.3000, which has psychological significance.
1.2916 was last tested in October 2018.
1.2830 is the final support line for now.
I am bullish on USD/CAD
Risk appetite has improved of late, over optimism that the U.S. and China are close to a limited trade deal. If there are further indications that the deal is imminent, minor currencies such as the Canadian dollar would stand to benefit.
Further reading:
- EUR/USD forecast – for everything related to the euro.
- GBP/USD forecast – Pound/dollar predictions
- USD/JPY forecast – analysis for dollar/yen
- AUD/USD forecast – projections for the Aussie dollar.
- Forex+ weekly forecast – Outlook for the major events of the week.
Safe trading!
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