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USD/CAD  showed little change last week, closing at 1.2427.  This week’s major event is Building Permits.  Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

In the US,  an excellent gain in jobs  helped the US dollar posts gains late in week against its Canadian counterpart. North of the border, an outstanding Canadian Employment Change was not enough to prevent the loonie from slipping late in the week. The loonie seems to have a good basis to rise: stable oil and a good economy, but this was not enough against the strengthening US dollar.

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

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

USD_CAD_Forecast.June8-12

  1. Housing Starts: Monday, 12:15. Housing Starts have shown some fluctuation in recent readings, and dipped to 182 thousand in April. This was short of the forecast of 187 thousand. The estimate for the May report stands at 187 thousand.
  2. Building Permits: Monday, 12:30. This is the key event of the week. Building Permits tends to show sharp fluctuations often leading to releases that are well off the estimates. This was the scenario in the  March release, when the indicator surged 11.2% after two straight declines. This reading crushed the estimate of 2.1%. The markets are expecting a more modest gain in the April report, with an estimate of 3.4%.
  3. BOC Senior Deputy Governor Carolyn Wilkins Speaks: Monday, 20:30. Wilkins will speak at an event in Montreal.   A speech which is more hawkish than expected is bullish for the Canadian dollar.
  4. NHPI: Thursday, 12:30. This housing inflation indicator provides a snapshot of the level of activity in the housing sector. The index continues to post weak readings, and dipped to a flat 0.0% in March, within expectations. The April report is  expected to show a modest gain of 0.2%.
  5. BOC Financial System Review: Thursday, 14:30, press conference at 13:00. The markets will be all ears as BOC Governor Stephen Poloz discusses the BOC report, which examines the stability of the Canadian financial system. Any hints about future monetary policy could affect the movement of USD/CAD.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.2458 and  quickly touched a low of 1.2367, testing support at 1.2387 (discussed last week). The pair then  moved  upwards, touching a high of 1.2563. USD/CAD retracted late in the week, as the pair closed at 1.2427.

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

Technical lines, from top to bottom

We start with resistance at 1.2924. This line  was last tested in March 2009.

1.2798 is the next resistance line.

1.2646 has served as a cap since mid-April.

1.2541 was tested in resistance as the pair posted gains before retracting.

1.2387 was tested in support and starts the week as an immediate support level.

1.2230 is the next line of support.

1.2114 is a strong support level.

1.1995, situated just  below the symbolic  1.20 level, has remained intact since mid-May.

1.1872 is the final support level for now.

I am bullish on USD/CAD

The US economy is expected to rebound in Q2 and the excellent US NFP report last week has reinforced this prognosis. The Canadian economy has not been able to keep up with the US, so the Canadian dollar could be in for a bumpy ride.

In this week’s podcast, we explain why EUR rallied on Draghi, what’s next, discuss oil and gas, run through the Plus500 story and preview next week’s events.

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