USD/CAD was unchanged last week, as the pair closed at the 1.35 line. This week’s highlights are GDP and Employment Change. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.
In the US, durable goods orders were sharp and UoM Consumer Sentiment beat expectations. Canadian retail sales reports were mixed, as retail sales improved to 0.6%, while core retail sales remained flat at 0.0%.
[do action=”autoupdate” tag=”USDCADUpdate”/]USD/CAD daily graph with support and resistance lines on it. Click to enlarge:
- BoC Governor Stephen Poloz Speech: Tuesday, 1:00. Poloz will speak at an event in Toronto. A speech that is more hawkish than expected is bullish for the Canadian dollar.
- Current Account: Tuesday, 13:30. This indicator is released each quarter. The current account deficit widened in Q2 to C$19.9 billion, but this beat the estimate of C$20.6 billion. The markets are expecting the deficit to narrow in Q3, with an estimate of C$16.4 billion.
- GDP: Wednesday, 13:30. GDP is one of the most important indicators and an unexpected reading can have a sharp impact on USD/CAD. The indicator dropped to 0.2% in August, matching the forecast. The downward trend is expected to continue in September, with an estimate of 0.1%.
- RMPI: Wednesday, 13:30.This inflation index disappointed in October, coming in at -0.1%. This was well short of the forecast of 0.5%. The markets are expecting a sharp turnaround in November, with a forecast of 3.2%.
- RBC Manufacturing PMI: Thursday, 14:30. The index continues to hover around the 50-point level, indicating stagnation in the manufacturing sector. The October release came in at 51.1 points.
- Employment Change: Friday, 13:30. The indicator has sparked in recent months, posting sharp gains for the past three months. This impressive streak is expected to end in the November report, with an estimate of 0.1 thousand. The unemployment rate is expected to remain unchanged at 7.0%.
- Labor Productivity: Thursday, 13:30. The quarterly report softened in Q2, coming in at -0.3%. This was well below the forecast of +0.2%. The markets are expecting much better news in the Q3, with the estimate standing at 1.1%.
USD/CAD opened the week at 1.3508 and dropped to a low of 1.3377 early in the week. The pair then reversed directions, climbing to a high of 1.3535, as resistance held at 1.3551 (discussed last week). USD/CAD closed the week at the round number of 1.35.
Live chart of USD/CAD:
Technical lines, from top to bottom
We begin with resistance at 1.3911.
1.3813 was a cushion in January and February.
1.3672 is next.
1.3551 was tested in resistance for a second straight week.
1.3457 is a weak support level. This line was a cap in September 2015.
1.3351 held firm as the pair dropped sharply before retracting.
1.3219 was a cap in April.
1.3081 is the final support line for now.
I remain bullish on USD/CAD
The US dollar has posted broad gains in recent weeks and with a December rate hike virtually certain, sentiment towards the greenback is very favorable.
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Further reading:
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro to Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- For the kiwi, see the NZDUSD forecast.
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