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USD/CAD dropped 1.43% last week, its worst week since June. There are three events in the upcoming week. Here is an outlook at the highlights and an updated technical analysis for USD/CAD.
Canada’s trade deficit dipped from C$-2.5 billion to C$-2.4 billion. The Ivey PMI slowed considerably, falling from 67.8 to 54.3 points. The week ended with excellent employment numbers. Employment Change jumped to 378.2 thousand, up from 245.8 thousand. The unemployment rate fell to 9.0%, down sharply from 10.2%.
In the US, the ISM Services PMI improved to 57.8, up from 56.9 points. The indicator is well into expansionary territory, above the neutral 50-level. The FOMC minutes expressed concern that the lack of a federal fiscal stimulus package could hinder the US recovery, which members said was moving faster than expected. A stimulus bill has been stuck in Congress and it is unlikely that a deal will be reached before the US election. The US dollar showed little reaction to the minutes, as policymakers did not provide any forward guidance on interest rate hikes.
USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
USD/CAD Technical Analysis
Technical lines from top to bottom:
1.3420 (mentioned last week) has held in resistance since the first week in August.
1.3330 is next.
1.3230 has switched to a resistance role after strong gains by USD/CAD last week.
1.3149 is a weak resistance line.
1.3016 is the first support level for now.
1.2935 is next.
1.2841 has provided support since October 2018.
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I am bullish on USD/CAD
The US dollar continues to struggle and the Canadian dollar took full advantage last week. With Covid-19 continuing to hamper economic activity, risk sentiment could weaken, which would be bearish for the Canadian dollar.
Further reading:
Safe trading!
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