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The  Canadian dollar  showed little change last week, as  USD/CAD  closed at 1.2655.  This week’s highlight is Core CPI. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

The Federal Reserve  minutes  indicated caution towards a rate hike and were dovish in general. The minutes also mentioned Greece, as the current Eurozone crisis is clearly on the mind of the Fed.  In Canada, job numbers softened but managed to beat the estimate.

Canada cuts interest rate to 0.50% – USD/CAD leaps to a new 6 year high

[do action=”autoupdate” tag=”USDCADUpdate”/]

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

USD_CAD_Forecast.July13-17

  1. Manufacturing Sales:  Wednesday, 12:30.  The indicator has struggled, with three declines in the past four readings. The April release came in -2.1%, well off the estimate of -1.3%. The markets are expecting better news in the May report, with the estimate standing at +0.4%.
  2. BOC Monetary Policy Report:  Wednesday, 14:00. This report is issued each quarter, and focuses on the  Bank’s view of economic conditions and inflation.  A press conference will follow the publication of the report.
  3. Overnight Rate:  Wednesday, 14:00. The BoC has  maintained the benchmark rate at 0.75% since  January, when it cut the rate  from an even 1.00%. No change is expected in the July rate announcement.
  4. Foreign Securities Purchases:  Thursday, 12:30. This indicator softened in April, with a reading of C$12.94 billion. However, this was much stronger than the forecast of C$5.03 billion. The markets are expecting a strong upturn in the May report, with an estimate of C$10.23 billion.
  5. Core CPI:  Friday, 12:30. The week wraps up with Core CPI, one of the most important indicators. The index posted a gain of 0.4% in May, within expectations. However, the markets are bracing for a decline of 0.1% in the June report.
  6. CPI:  Friday, 12:30. CPI is the primary gauge of consumer inflation, and includes volatile items which are removed from Core CPI. The index posted  a gain of 0.6%, within expectations. The forecast for the June release stands at 0.2%.

* All times are GMT.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.2612 and  quickly slipped to a low of 1.2562, as support held firm at 1.2541  (discussed last week).  The pair then reversed directions,  climbing to a high of 1.2780. USD/CAD lost ground later in the week, and closed at 1.2655.

Live chart of USD/CAD: [do action=”tradingviews” pair=”USDCAD” interval=”60″/]

Technical lines, from top to bottom

We  begin with resistance at 1.3063, just above the symbolic line of 1.30.

1.2924 was last tested in March 2009.

1.2798 has remained intact since mid-March.

1.2646 has switched to a support role as the pair posted slight gains during the week. It is a weak line and could see further action during the week.

1.2541 held firm as the pair lost ground early in the week before recovering.

1.2386  has strengthened in support as the pair posted gains.

1.2230 was  active in June before the Canadian dollar softened.

1.2114 is a strong support level.

1.1995  is  the final support line for now.  This line has remained intact since mid-May.

I am bullish on USD/CAD

Worries about Greece were expressed in the Fed minutes. If the Greek crisis is resolved, there are less hurdles for the Fed to hike in September. If Canadian inflation numbers do no meet expectations, the loonie could continue to slide.

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