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The Canadian dollar took advantage of a  broadly weaker  US dollar and gained over 100 points last week.  USD/CAD closed the week at 1.2053. This week’s highlight is Manufacturing Sales. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

The  Canadian dollar  took advantage of strong Canadian data, as Building Permits and unemployment numbers were unexpectedly strong. The US dollar  also lost ground due to  a mixed NFP report.

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

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

USDCAD_Forecast.May 11-15.

  1. NHPI: Thursday, 12:30. This index measures inflation in the housing sector. The indicator improved in February, posting a gain of 0.2%, within expectations. The upward trend is expected to continue, with an estimate of 0.3% in the March report.
  2. BOC Review: Thursday, 14:30. This report, which is  released twice each year, includes articles on the economy and central banking. It is a minor event which is unlikely to have  much impact on the movement of USD/CAD.
  3. BOC Deputy Governor Lynn Patterson Speaks: Thursday, 19:45. Patterson will speak at an event in Vancouver. A speech that is more hawkish than expected is bullish for the Canadian dollar.
  4. Manufacturing Sales: Friday, 12:30. This is the key event of the week. The indicator has struggled, with four declines in the past five months. The February event remained at -1.7%, well off the estimate of +0.2%. The estimate for the March report stands at +0.3%.
  5. Foreign Securities Purchases: Friday, 12:30. This indicator is closely linked to currency demand, as  foreigners must purchase Canadian dollars in order to buy Canadian securities. The  indicator jumped in February, posting a gain of C$9.27 billion. This easily beat the forecast of  C$6.00 billion. The upward move is expected to continue in the March release, with the estimate standing at C$7.23 billion.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.2163 and quickly touched a  high of 1.2179, as resistance remained firm at 1.2230 (discussed last week). The pair then reversed directions and broke below the 1.20 line, touching a low of 1.1939. USD/CAD then  moved higher  and closed the week at 1.2053.

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

Technical lines, from top to bottom

We  start with resistance at 1.2624.

1.2541 remains a strong resistance line. It has held firm since mid-April.

1.2387 is the next line of resistance.

1.2230 held firm for a second straight week as the pair posted slight gains early in the week.

1.2114 was easily breached as the pair dropped sharply and has switched to a resistance role. It starts the week as an immediate resistance line.

1.1995 was tested as the Canadian dollar  posted strong gains  before retracting. It is a weak support line and could see more action early in the week.

1.1872 is the next support level.

1.1731 is the final support line for now. It has held firm since early January.

I am neutral on USD/CAD

The Canadian dollar has enjoyed some success and finds itself close to 4-month lows against its US counterpart. However, sentiment remains positive  over the US economy, and the markets are expecting better news in Q2 after a lackluster Q1.

In this week’s podcast, we take tips from Yellen, discuss commodity currencies and preview next week’s events

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