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The Canadian dollar  changed directions last week, as USD/CAD  surged 360  points. The pair  closed  just above the 1.29  line.  The upcoming week is a quiet one, with just three releases.  Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

It was a rough week for employment indicators as, Nonfarm Payrolls was dismal, falling to 160 thousand, well below expectations. Canadian job numbers also struggled, as Employment Change posted a decline of 2.1 thousand, its third decline in four readings.

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

USDCAD_ Daily Chart May9-13.

  1. Housing Starts: Monday, 12:15. Housing Starts remain strong, but slipped to 204 thousand in March, missing the forecast of 215 thousand. The markets are expecting the downward trend to continue, with an estimate standing at 195 thousand.
  2. BOC  Senior Deputy Governor Carolyn Wilkins  Speaks: Wednesday, 12:45. Wilkins will deliver a speech at a conference in Montreal. The markets will be looking for clues as to the BoC’s plans regarding future monetary policy.
  3. NHPI: Thursday, 12:30.  This inflation indicator  provides a snapshot of the level of activity in the housing sector. The index posted a small gain of 0.2% in February, matching the  forecast.  The markets are expecting a slight improvement in March, with the estimate standing at 0.3%.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.2541 and  dropped to a low  of 1.2458 early in the week. The pair then reversed directions and shot upwards, touching a high of 1.2951, breaking above resistance at  1.2900 (discussed last week). USD/CAD closed the week at 1.2906.

Live chart of USD/CAD:

Technical lines, from top to bottom

With USD/CAD posting strong gains, we start at  higher levels:

1.3353 has provided resistance since mid-March.

1.3219 was a cap in April.

1.3081 is next.

1.2990 has held firm since mid-April.

The round  number of 1.2900 is providing weak support. It could see further action early in the week.

1.2780 is next.

1.2646 has switched to  support after USD/CAD posted sharp gains.

1.2538 is the final support level for now.

I am  neutral on USD/CAD

Weak Canadian numbers last week could continue to weigh on the Canadian dollar. At the same time, if oil prices move higher, the loonie could follow suit and move to higher ground.

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