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The Canadian dollar was almost unchanged  last week,  with USD/CAD  closing at 1.1254.  There are a number of key releases, highlighted by Ivey PMI and Employment Change.  Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

In a symbolic move,  the Federal Reserve  ended its QE program and issued a hawkish policy statement. GDP  looked sharp, pointing to a deepening recovery in the US. In Canada, GDP was unimpressive, posting a decline of 0.1% last month. This was the key indicator’s first decline since January.

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

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

USDCADForecast Nov.3-7

 

  1. BoC Governor Stephen Poloz Speaks: Monday, 17:50. Poloz will speak at an event in Toronto. A speech which is more hawkish than expected is bullish for the Canadian dollar.
  2. Trade Balance: Tuesday, 13:30. Canada posted a trade deficit of CAD $0.6 billion, a six-month low. This was well off the estimate of  CAD $1.5 billion. Little change is expected in the upcoming release, with an estimate of CAD $0.7 billion.
  3. BoC Governor Stephen Poloz Speaks: Tuesday, 15:30. Poloz will testify before the House of Commons Standing Committee on Finance, in Ottawa. The markets will be looking for clues from Poloz regarding the BoC’s future monetary policy.
  4. Building Permits: Thursday, 13:30.   Building Permits tends to show sharp fluctuations, resulting in readings that are often well off the estimate. The indicator plunged in September,  posting a reading of -27.3%. This was nowhere  near the forecast of -6.0%. The markets are expecting a strong turnaround in the upcoming release, with  an estimate of  a 5.2% gain.
  5. Ivey PMI: Tuesday, 15:00. The PMI jumped to 58.6 points last month, up sharply from 53.4 points in the previous reading. This easily beat the  estimate of 53.4 points. The markets are expecting the upward trend to continue, with the estimate standing at 59.2 points.
  6. Employment Change: Friday, 13:30. Employment Change was outstanding in September, with a gain of 74.1 thousand, compared to an estimate of 18.7 thousand. This marked the indicator’s sharpest gain since May 2013. The estimate for the upcoming reading is a small gain of 0.4 thousand. Will the indicator repeat and exceed the estimate? The Unemployment Rate is expected to remain at unchanged at 6.8%.

* All times are GMT.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.1238 and  dropped to a low  of 1.1122.  The  pair then  reversed directions and climbed to a high  of 1.1333, as resistance stayed firm at 1.1373  (discussed last week). USD/CAD closed the week at 1.1254.

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

Technical lines, from top to bottom:

We  start 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.

1.1333  was  tested by the pair late in the week as  the Canadian dollar posted strong gains.  This line had  remained intact since July 2009.

1.1271 was easily breached as the US dollar showed some strength. It has reverted to a support line.

1.1122 was tested by the pair early in the week. This line is currently providing strong support.

1.1054  remains a strong support line. 1.0944  is next.

1.0815 has held firm since late August.

1.0737  marked a cap in mid-2010, before the US dollar tumbled and dropped all the way into 0.93 territory. It is the final support line for now.

I  remain  bullish  on USD/CAD

Market sentiment remains positive about the US  , which continues to expand at an impressive clip,  led by  a strong GDP and excellent consumer confidence numbers.  With the Fed giving the economy a thumbs up and concluding QE, the next move is a rate hike in 2015. Canadian numbers have been mixed as the US economy continues to outperform its northern neighbor.

In our latest podcast, we  review  November’s big event and run down the recent ones:

Download it directly here.

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Further reading: