- Inflation Data: Wednesday, 12:30. Canada releases a host of inflation indicators, led by CPI. The index has been pointing to weak inflation levels, with two declines in the past three months. Another weak reading is expected in September, with an estimate of -0.3%.
- Manufacturing Sales: Thursday, 12:30. The manufacturing sector has struggled, and manufacturing sales has recorded back-to-back declines. The July release came in at -1.3%. Will we see an improvement in the September release?
- ADP Nonfarm Employment Change: Thursday, 12:30. The ADP indicator continues to point to solid employment data. In August, the economy created 49.3 thousand jobs. We will now receive the data for September.
USD/CAD Technical Analysis
Technical lines from top to bottom:
We start with resistance at 1.3565.
1.3445 has remained intact as resistance since the first week of June. This is followed by 1.3385.
1.3350 has held since early September.
1.3265 switched to a resistance role late in the week after sharp losses by USD/CAD last week.
1.3175 is an immediate support level.
1.3125 (mentioned last week) has provided support since the end of July.
1.3048 is protecting the round number of 1.3000, which has psychological significance.
1.2916 has held firm since October.
1.2830 is the final support line for now.
I am bearish on USD/CAD
U.S. PMIs and inflation indicators are pointing to a slowdown in the U.S economy, and this could bode poorly for the Canadian dollar. Analysts like to say, “when the U.S. sneezes, Canada catches a cold”, a reference to the fact that the Canadian economy is heavily dependent on its southern neighbor. Oil prices have also slipped in recent weeks, which could weigh on Canada’s energy sector.
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