The Canadian dollar had a quiet week, posting slight losses. USD/CAD closed the week at 1.2167. This week’s major highlight is GDP. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.
In the US, there was some good news on the housing front, with existing home sales beating expectations. However, New Home Sales failed to keep pace and Durable Goods Orders were a mixed bag. In Canada, Wholesale Sales disappointed with a second straight decline.Updates:
USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
- BOC Governor Stephen Poloz Speaks: Tuesday, 12:45. Poloz will testify before the House of Commons Standing Committee in Ottawa. Analysts will be looking for clues as to the BOC’s future monetary policy.
- RMPI: Wednesday, 12:30. This index measures inflation in the manufacturing sector. In the February reading, the indicator bounced back from a string of negative readings, posting a sharp gain of 6.1%. This beat the estimate of 5.1%. The markets are expecting another decline in the March report, with an estimate of -1.8%.
- GDP: Thursday, 12:30. GDP is one of the most important economic indicators, and an unexpected reading can have an immediate effect the direction of USD/CAD. The indicator has struggled, posting two contractions in the past three readings. The February reading came in at -0.1%, shy of the forecast of +0.2%. The estimate for the March reading stands at -0.2%.
- BOC Governor Stephen Poloz Speaks: Thursday, 14:30. Poloz will testify before the Senate Finance Committee in Ottawa. Remarks which are more hawkish than expected are bullish for the Canadian dollar.
USD/CAD opened the week at 1.2212 and touched a high of 1.2305. The pair then reversed directions and dropped to a low 1.2102, testing support at 1.2114 (discussed last week). USD/CAD closed the week at 1.2167.
Live chart of USD/CAD:
Technical lines, from top to bottom
We start with resistance at 1.2624.
1.2541 remains a strong resistance line.
1.2387 held steady as the pair showed some strength during the week before retracting.
1.2230 was tested during the week and is currently an immediate resistance line.
1.2114 is the first line of support. This line was tested during the week and could see further action early in the week.
1.1995 is providing strong support just shy of the symbolic 1.20 line.
1.1872 was a key resistance line in February 2007.
1.1731 is the final support line for now. It has held firm since early January.
I am neutral on USD/CAD
The Canadian dollar remains close to 3-month highs, as the currency has benefitted some weak US numbers in the past few weeks. With a US rate hike apparently on hold, the Canadian dollar could remain steady, unless GDP is unexpectedly weak.
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro to Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- For the kiwi, see the NZDUSD forecast.