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USD/CAD took a pause last week and showed limited movement. This week has a light schedule, with one tier-2 event. Here is an outlook at the highlights and an updated technical analysis for USD/CAD.
Canada Manufacturing sales posted a third straight gain, with a reading of 7.0%. The headline inflation reading dropped by 0.1%, its first decline in four months. On the employment front, ADP nonfarm payrolls came in at -205.4 thousand, but the Canadian dollar managed to hold its despite this disappointing release.
In the US, the highlight was the Federal Reserve policy meeting. As expected, the Fed kept interest rates close to zero. Of more interest to investors was the Fed message that it will not raise rates before 2023, under its new inflation target, which allows inflation to overshoot 2% without triggering a rate hike.
US retail sales slowed significantly in August. The headline reading dropped to 0.6%, down from 1.2%. Core retails sales came in at 0.7%, down sharply from 1.9%. This points to weakness in consumer spending, which is a key driver of economic growth.
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 is a weak resistance line.
1.3149 is the first support level.
1.3016 is next.
1.2904 is protecting the 1.29 line.
1.2841 has provided support since October 2018. It is the final support line for now.
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I am neutral on USD/CAD
The US dollar has leveled off after showing some muscle, as Covid-19 remains a serious headache for the US economy. With no major Canadian events on the schedule, it could be another quiet week for USD/CAD.
Further reading:
Safe trading!
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