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The Canadian dollar broke above the 1.14 line but recovered and showed little change on the  week. USD/CAD  closed the week at 1.1326.  This week’s key release is Manufacturing Sales.  Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

US Nonfarm Payrolls slipped to 214 thousand, well short of the estimate of 235 thousand. On a brighter note, the Unemployment Rate slipped to 5.8%, its lowest level in six years. Excellent Canadian employment numbers on Friday bolstered the Canadian dollar, as Employment Change crushed the estimate and the Unemployment Rate dropped sharply.

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

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

USDCADForecast Nov.10-14

  1. Housing Starts: Monday, 13:15. Housing Starts is an important gauge of the strength of the housing sector. The indicator rose to 197 thousand last month, slightly above the estimate of 195 thousand. The estimate stands at 200 thousand.
  2. BoC Deputy Governor Lawrence Schembri Speaks: Wednesday, 16:25. Schembri will speak at an event in Summerside, PEI. A speech which is more hawkish than expected is bullish for the Canadian dollar.
  3. NHPI: Thursday, 13:30. New Housing Price Index measures the change in inflation in the housing industry. The indicator rose to 0.3% last month, the strongest gain since February. The forecast for the October reading is 0.2%.
  4. BoC Review: Thursday, 15:30.  This report is published  on a semi-annual basis.  It  is considered a minor report and  is unlikely  to have a significant impact on the  movement of  USD/CAD.
  5. BOC Senior Deputy Governor  Carolyn Wilkins Speaks: Thursday, 20:05. Wilkins will deliver remarks at the University of Waterloo, Ontario. The markets will be looking for clues as to the BoC’s future monetary policy.
  6. Manufacturing Sales: Friday, 13:30. Manufacturing Sales is the key event of the week. The indicator dropped sharply last month, coming in at -3.3%. This reading was much softer than the estimate of -1.6%. The markets are expecting a strong turnaround in the upcoming release, with an estimate of 1.3%. Will the indicator meet or beat this estimate?

* All times are GMT.

 

USD/CAD Technical Analysis

USD/CAD opened the week at 1.1288 and  quickly dropped to a low  of 1.1263.  The  pair climbed to a high  of 1.1466, as resistance held firm at 1.1494 (discussed last week). USD/CAD closed the week at 1.1326.

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

 

Technical lines, from top to bottom:

We  begin with resistance at 117.52.  This lined marked  the start of  a  rally  by the Canadian dollar in  February 2007, which saw  USD/CAD  drop below parity.  1.1640 is next.

1.1494 was a key resistance line in November 2006. It weakened during the week as the pair pushed above the 1.14 line before retracting.

1.1333  was tested by the pair but recovered at the end of  the  week.  USD/CAD closed the week just shy of this line.

1.1271 remains a weak support level. It could see further activity early in the week.

1.1122  marks the low point of a US dollar rally which started late in October and saw USD/CAD climb above 1.14 last week.

1.1054  remains a strong support line. 1.0944  is next.

1.0815 has held firm since late August. It is the final support line for now.

I  remain  bullish  on USD/CAD

With QE finally behind us, the focus shifts to an interest rate hike. The US economy continues to improve and wages could move upwards, which will put pressure on the Fed to raise interest rates.

In our latest podcast, we run down the ECB, talk about the huge Japanese move, preview the UK and also talk about Brazil:

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Further reading: