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The  Canadian dollar  sagged badly last week, as  USD/CAD  shot up about 200 points.  The pair closed the week at 1.2560.  This week’s highlight is Employment Change. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

The US gained 223K jobs in June, slightly below expectations.  The unemployment rate  dropped more than expected  but wages disappointed. In Canada, GDP disappointed with a decline, its third decline in four readings.

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

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

USD_CAD_Forecast.July6-10

  1. Ivey PMI:  Monday, 14:00.  The week kicks off with Ivey PMI, a key event which traders should treat as a market-mover. The index surged to 62.3 points in May, crushing the estimate of 55.1 points. This marked the indicator’s best showing since October 2013. The indicator is expected to soften in June, with a forecast of 56.2 points.
  2. BOC Business Outlook Survey:  Monday, 14:30. This report is released each quarter, and is  based on a  survey of businesses which are asked to rate business conditions. The survey helps analysts  predict future  hiring, spending and investment plans in the business sector.
  3. Trade Balance:  Tuesday, 12:30. Trade Balance is closely linked to currency demand, as foreigners must purchase Canadian dollars in order to buy Canadian exports. The indicator has been steady, posting a trade deficit of C$3.00 billion for two consecutive months. This was a higher deficit than expected on both occasions. The deficit is expected to narrow to C$2.5 billion in the  May report.
  4. Building Permits:  Wednesday, 12:30. Building Permits tends to show strong fluctuation, making accurate estimates a tricky task. The indicator has posted excellent gains of 11.6% for two straight readings, easily beating the forecast each time. Will the indicator repeat with a strong gain in the upcoming release?
  5. Housing Starts:  Thursday, 12:15. This minor event provides a snapshot of the level of activity in the housing sector.   The indicator surged to 202 thousand in May, well above the estimate of 187 thousand. This marked the first time that the indicator has  reached the 200 thousand level since July 2013. The estimate for the June report stands at 191 thousand.
  6. NHPI:  Thursday, 12:30. NHPI measures inflation in the housing sector. The index continues to post weak readings, with an April release of just 0.1%, which was within expectations. Little change is expected in the May report.
  7. Employment Change:  Friday, 12:30. This is the key event of the week. The indicator bounced back in impressive style in May, with a sharp gain of 58.9 thousand. This easily exceeded the estimate of 10.2 thousand, and marked the highest monthly gain since September 2014.  The markets are bracing for a sharp  downturn in the  June release, with a estimate of -4.5 thousand. The unemployment rate has been pegged at 6.8% for the past four months, and is expected to rise to 6.9% in the June report.

* All times are GMT.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.2351 and  quickly dropped to a low of 1.2302. The pair then reversed directions, climbing to a high of 1.2633 late in the week,  as resistance remained intact at 1.2646 (discussed last week). USD/CAD closed the week at 1.2560.

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

Technical lines, from top to bottom

With USD/CAD posting strong gains last week, we begin at higher levels:

We  begin with resistance at 1.3063, slightly 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 is the next resistance line.

1.2541 was tested and is a weak resistance line. Will the pair break through this week?

1.2386  has strengthened in support as the pair posted strong gains.

1.2230 was busy in June but has some breathing room as the pair trades at higher levels.

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

US data has been mixed, but the  Fed seems to be on track for a hike in September. If upcoming key  Canadian numbers  such as employment data disappoint, it could be a rough week for the loonie.

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