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The Canadian dollar plunged last week, losing over 200 points. USD/CAD  closed  the week at the 1.33 line. The upcoming week is a quiet one, with four events on the schedule.  Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

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

The US dollar was broadly higher following the  Non-Farm Payrolls report, which  more than beat expectations, with 271K jobs gained and a 2.5% y/y gain in wages. This  outstanding release  points to a  strong labor market, and  certainly keeps the December rate hike option wide open. Canada also produced strong job numbers, but this wasn’t enough to hold back the dollar juggernaut.

 

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

USD_CAD_Forecast.Nov9-13

 

  1. Housing Starts:  Monday, 13:15. Housing Starts provides a snapshot of the level of activity in the housing sector. The indicator  has been on  an upswing, and improved to 231 thousand in September, crushing the estimate of 202 thousand. However, the markets are expecting a sharp downturn in the October report, with an estimate  of 198 thousand.
  2. BOC Senior Deputy Governor Governor Carolyn Wilkins Speaks:  Tuesday, 17:00. Wilkins will speak at an event in Toronto. The markets will be listening for clues as to future monetary moves by the BOC.
  3. BOC Senior Deputy Governor Carolyn Wilkins Speaks:  Thursday, 13:00.Wilkins will speak at an event in Toronto. A speech that is more hawkish than expected is bullish for the Canadian dollar.
  4. NHPI: This housing inflation indicator improved to 0.3% in August, which was within expectations.  Little change is expected in the  September report, with an estimate of  0.2%.

* All times are GMT.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.3075 and  dropped to a low  of 1.3036. The pair then reversed directions,  climbing to a high of 1.3318 as resistance held firm at 1.3353  (discussed last week).  USD/CAD closed the week at 1.3301.

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

Technical lines, from top to bottom

With USD/CAD posting sharp  gains last week, we start at higher levels:

We  start with resistance at 1.3759.

1.3587 was a cap in March 2004.

1.3443 has held firm since late September.

1.3353 remained intact as the pair posted strong gains last week.

1.3213 was easily broken and has switched to a support role.

1.3165 is the next support line.

1.3063 is protecting the symbolic 1.30 line.

The very round line of 1.2900 is  the final line of support for now.

 

I am  bullish on USD/CAD

With the surprisingly strong NFP release on Friday, a Fed rate hike is more likely in December, and this  will likely help the US dollar continue its  rally against the weak Canadian dollar.

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