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The Canadian dollar rebounded last week, gaining over 100 cents against the US dollar. USD/CAD  closed the week at 1.0962. This week’s highlight is Core Retail Sales.  Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

US   unemployment  claims dropped sharply  last week, and the Fed hinted that once rates are raised, subsequent  hikes could take place more quickly than expected. Still, the Canadian dollar came out on top last week, buoyed by strong manufacturing and inflation numbers.

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

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

USDJPY Forecast Sep22-26

  1. BOC  Senior Deputy Governor Carolyn Wilkin Speaks: Monday, 17:00. Wilkin  will address an event in Toronto. Any remarks  which are “out of the ordinary” could affect the movement of USD/CAD.
  2. Core Retail  Sales: Tuesday, 12:30. This is the key event of the week. The indicator excludes automobile sales, which are volatile and can distort the overall trend. In July, the indicator surprised with a strong gain of 1.5%, well above the estimate of 0.4%. The markets are expecting a downturn in the upcoming release, with the estimate standing at -0.1%.
  3. Retail Sales: Tuesday, 12:30. Retail Sales is the primary gauge of consumer spending. The indicator posted an excellent gain of 1.1% last month, easily   beating the estimate of 0.3%.  The estimate for the August release stands at 0.4%.  

* All times are GMT.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.1088.  The pair touched a high of 1.1099, as resistance held firm at 1.1122 (discussed last week). The pair  then reversed directions,  dropping to a low of 1.0886. The Canadian dollar was unable to consolidate at these levels and USD/CAD closed at 1.0962.

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

Technical lines, from top to bottom:

With USD/CAD posting strong losses, we begin at lower  levels:

1.1494 was a key resistance line in November 2006.

1.1369 was breached in October 2008 as the US dollar posted  sharp gains, climbing as high as the 1.21 level. This line has remained steady since July 2009.

1.1278 has provided resistance since March. This line marked the start of a rally by the Canadian dollar, which dropped below the 1.09 level.

 1.1122 held firm as the pair came close to the 1.11 level. This line is weak resistance.

1.1054 was breached by the surging US dollar and starts the week as an immediate support line.

1.0944  has reverted to a support role and is a strong line.

1.0815 had been under pressure but gained some breathing room as the pair trades at higher levels.

1.0737  marked a cap in mid-2010, before the US dollar tumbled and dropped all the way into 0.93 territory.

1.0621 marked a low point for the pair  in early July.

1.0412 was an important support line in November 2012, when USD/CAD posted a strong rally which saw it climb above the 1.12 level. It is the final support level for now.

I  am  bullish  on USD/CAD

The Canadian dollar recovered nicely last week, but the US dollar has shown broad strength and could rebound this week. The FOMC statement helped the greenback as QE winds up and the guessing game as to the timing of a rate hike begins in earnest.

Further reading: