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The Canadian dollar  posted strong gains for a third straight week, gaining  about  130 points against the US dollar. USD/CAD  closed the week  at the  1.32 line and is trading at its lowest level since early November. This week’s highlights are Manufacturing Sales, CPI and Retail Sales. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

The BoC maintained interest rates at 0.50% and  sounded  cautiously optimistic about the economic conditions. The Canadian dollar shrugged off soft employment numbers, as Employment Change declined and the unemployment rate edged higher. In the  US,  Unemployment Claims looked sharp, dropping to 259 thousand.


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

USD_CAD Weekly Forecast-March 14-Mar. 18

  1. Manufacturing Sales: Wednesday, 12:30. The week kicks off with this key indicator. In January, the indicator posted a strong gain of 1.2%, ahead of the estimate of 0.9%.
  2. Foreign Securities Purchases: Wednesday, 12:30. The indicator reversed in January and posted a decline of C$1.41 billion, but this beat the forecast of C$6.05 billion.
  3. Wholesale Sales: Thursday, 12:30. Wholesale Sales is a leading indicator of consumer spending, a key engine of economic growth. The indicator improved in  December with a gain of 2.0%, crushing the estimate of 0.1%.
  4. Core CPI: Friday, 12:30. This key indicator should be treated as a market-mover. The index rebounded in  December with a gain of 0.3%, within expectations. The upward trend is expected to continue in January, with an estimate of 0.5%.
  5. Core Retail Sales: Friday, 12:30. Core Retail  Sales excludes the most volatile items which comprise Retail Sales. The indicator came in at -1.6% in December, well short of the estimate of -0.5%. The markets are expecting better news in January, with the estimate standing at 0.7%.
  6. CPI: Friday, 12:30. CPI is the primary gauge of consumer spending. The index improved in January after two straight declines, posting a modest gain of 0.2%. This beat the forecast of 0.0%. Another reading of 0.2% is anticipated in the  February release.
  7. Retail Sales: Friday, 12:30. Retail Sales slipped badly in December, posting a decline of 2.2%, compared to an estimate of a 0.7% decline. The markets are expecting better news in January, with a forecast of 0.8%.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.3335  and touched a high of 1.3446, as resistance held firm at 1.3457 (discussed last week). The pair then reversed directions and dropped to a low of 1.3164.  USD/CAD closed the week at 1.3202.

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

Technical lines, from top to bottom

1.3620 is a strong resistance line.

1.3457 held firm as USD/CAD posted gains before retracting.

1.3353 is the next line of resistance.

1.3213 was tested in support and is a weak line. It could see further action early in the week.

13174 was a cap in October 2015.

1.3064 is protecting the symbolic 1.30 line.

The round  number of 1.2900 was a cushion in October.

1.2780 is the final support line for now.

I am  bearish on USD/CAD

The Canadian dollar continues to climb, buoyed by a rise in oil prices and renewed investor confidence about global economic conditions. There is even talk that the BoC might raise interest rates in 2016.  In the US,  the  Fed is unlikely to raise rates  next week, given some softness in the US economy.

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