- Powell delivered a hawkish speech at Jackson Hole.
- US nonfarm payrolls are expected to show how the US economy is faring.
- Investors are waiting to see how Canada’s economy performed in Q2.
The USD/CAD weekly forecast is bullish as the US dollar will likely continue its bull rally on Powell’s hawkish comments.
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Ups and downs of USD/CAD
USD/CAD was driven by the dollar last week as the most significant news releases came from the United States. On Tuesday, the pair made a solid bearish candle after the US released the new home sales data for July, which dropped. The pair went up on Wednesday on a positive core durable goods report from the US. Finally, Friday’s Jackson Hole meeting saw the pair close on a strong bullish candle. This candle came about because Powell delivered a hawkish speech insisting the Fed still had much to do in the fight against inflation.
“Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will likely be some softening of labor market conditions,” Powell said.
“His comments were hawkish. He’s keeping the pedal to the metal here regarding policy to fight inflation,” said Lindsey Bell, chief money and markets strategist at Ally.
Next week’s key events for USD/CAD
The world’s largest economy’s monthly jobs report will be released on September 2. It will test the notion that the economy is in good shape and show if the Federal Reserve can implement a “soft landing” while raising interest rates to combat inflation that has been running at four-decade highs.
Despite two consecutive quarters of declining US gross domestic product, those who argue against the possibility of a recession have, at least thus far, been able to cite a robust labor market.
Investors will also pay attention to Canada’s economy when the GDP data is released next week.
USD/CAD weekly technical forecast: Bulls have taken over 1.29
The daily chart shows that the price bounced off the 22-SMA and the 1.29014 support level. The RSI supports bullish momentum as it trades above 50. The trend here is bullish, and the price will probably go higher towards the 1.32013 resistance level.
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However, if there isn’t enough momentum, the price might consolidate as it has in the past few weeks.
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Saqib Iqbal
