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The Canadian dollar posted its first winning week since early December, as  USD/CAD lost about 160 points last week.  This week’s highlight is Manufacturing Sales. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

 

USD/CAD showed strong movement last week, and the Canadian dollar finally managed to post a winning week. Canadian Ivey PMI slipped, but Building Permits jumped  and employment numbers were strong. In the US, PMIs  were lukewarm, but  there was good news  from a  superb NFP report, upwards revisions and big bounce in wages.

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USD/CAD daily chart with support and resistance lines on it. Click to enlarge:

USDCAD_Forecast Feb.9-13

  1. Housing Starts: Monday, 13:15. Housing Starts slipped in December to 181 thousand, well off the forecast of 191 thousand. This was the indicator’s worst showing since March. Another weak reading is expected in January with an estimate of 184 thousand.
  2. BOC Senior  Deputy Governor  Carolyn Wilkins Speaks: Tuesday, 17:35. Wilkins will deliver remarks at event in Ottawa. A speech which is more hawkish than expected is bullish for the Canadian dollar.
  3. NHPI:  Thursday, 13:30. This is the second housing indicator of the week. The index helps gauge activity and demand in the Canadian housing sector. The indicator has been very steady, posting three consecutive readings of 0.1%.
  4. Manufacturing Sales: Friday, 13:30. This is the major event of the week. The indicator has struggled, with three declines in the past four readings. The November reading posted a sharp drop of 1.4%, well of the estimate of a 0.5% decline. The markets are expecting another contraction in the December report, with an estimate of -0.9%.

* All times are GMT

USD/CAD Technical Analysis

USD/CAD opened the week at 1.2690 and quickly  touched  high of 1.2772. The pair then sharply reversed directions and dropped to a low of 1.2351, testing support at 1.2387 (discussed last week).  USD/CAD then moved higher, closing the week at the 1.2525.

Live chart of USD/CAD:

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Technical lines, from top to bottom

1.3063 has  been a  resistance line since March 2009.

1.2924 was an important support line back in November 2003.

1.2711 again saw action this week as the pair tested this resistance before retracting.

1.2541 was easily breached early in the week and has switched to a weak resistance line.

1.2387 was an important cap back in May 2005.

1.2230 is the next support level.

1.2114 is the final support line for now. This line switched from resistance two weeks ago when the US dollar started a strong rally.

I am bullish on USD/CAD

The Canadian dollar managed to post gains last week, but has struggled in 2015, and the downward trend could resume. In the US, recent data has been lukewarm, but the all-important employment numbers have generally met expectations. The excellent NFP report, with its positive revisions and bounce in wages will remove some of the doubts about the upcoming rate hike, which is good news for the US dollar.

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