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The  Canadian dollar lost about 270 points, as USD/CAD  pushed past the 1.30 line for the first time since March 2009. The pair closed at 1.270.  This week’s highlights are Wholesale Sales and Core Retail Sales. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

The loonie took a big hit as the BOC surprised the markets and lowered the rates by a quarter-point to 0.50%. In the US, retail sales  was dismal  and consumer sentiment fell short, but this had little impact on the spectacular US dollar rally.

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

 

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

USD_CAD_Forecast.July20-24

  1. Wholesale  Sales:  Monday, 12:30. This key release is a leading indicator of consumer spending, a key  component of  economic growth. The indicator shot up 1.9% in April, crushing the estimate of 0.3%. The indicator is expected to soften in May, with a forecast of just 0.1%.
  2. Core Retail Sales:  Thursday, 12:30. Core Retail Sales excludes automobile sales, which are volatile and can distort the underlying trend. The indicator was unexpectedly soft in April, with a sharp decline of 0.6%. The markets had expected a 0.3% gain. The markets are expecting much better news in the May report, with an estimate of 0.7%.
  3. Retail Sales:  Thursday, 12:30. Retail Sales is the primary gauge of consumer spending. The indicator sagged in April, with a disappointing reading of -0.1%. This was nowhere near the forecast of +0.7%. May is expected to bring better news, with the estimate standing at 0.4%.

* All times are GMT.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.2697 and  quickly slipped to a low of 1.2673, as support held firm at 1.2646  (discussed last week).  It was all uphill from there,  as USD/CAD climbed to a high of 1.3006. USD/CAD closed at 1.2970.

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

Technical lines, from top to bottom

With USD/CAD making huge gains last week, we start from higher levels:

There is resistance at 1.3346. This  line has held firm since August 2004.

1.3165 is the next line of resistance.

1.3063 is  just above the symbolic line of 1.30.

1.2924 was breached and switched to support for the first time since March 2009.

1.2798 is the next line of support.

1.2646 held firm in support and has some breathing room following strong gains by the US dollar.

1.2541 is providing strong support.

1.2386 is the final support level for now.

I am bullish on USD/CAD

The Canadian economy has been struggling and the BOC stepped in with a rate cut  in order  to kick start the economy. It is  the opposite story in the US, with Yellen’s relatively upbeat comments. The monetary divergence means that the pair could continue to climb.

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