- Housing Starts: Tuesday, 12:15. Housing Starts improved to 227 thousand in August, up from 222 thousand a month earlier. The indicator is projected to drop to 217 thousand in September.
- Building Permits: Tuesday, 12:30. Building Permits tend to show sharp volatility from month-to-month. After two straight declines, the indicator rebounded in August with a gain of 3.0%, above the estimate of 2.1%. Another gain is expected in September, with an estimate of 2.3%.
- NHPI: Thursday, 13:30. The New Housing Price Index has posted three successive declines of 0.1%, which indicates weakness in the housing sector. The forecast for August stands at a flat 0.0%.
- Employment Data: Friday, 12:30. The economy created 81.1 thousand jobs in August, a spectacular rebound after two successive declines. This type of gain is unlikely to be repeated. The unemployment rate for August remained steady at 5.7%, matching the forecast.
USD/CAD Technical Analysis
Technical lines from top to bottom:
We start with resistance at 1.3630, which has held since January. 1.3565 is next.
1.3445 has remained intact as resistance since the first week of June. This is followed by 1.3385.
1.3350 was under pressure late last week. It could be tested early in the upcoming week.
1.3265 has switched to a support role after gains by USD/CAD last week. 1.3175 is next.
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. It is the final line for now.
I am bearish on USD/CAD
With U.S. services and manufacturing PMIs slowing in September, there is worrisome talk of the U.S. heading towards a recession. A slowdown in the U.S. is bad news for the Canadian economy, which is heavily dependent on its southern neighbor. As well, oil prices are under pressure, which could weigh on Canada’s energy sector.
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