One Canadian dollar is now worth significantly less than one US dollar as the loonie surrendered to the greenback . GDP is the highlight of this week. Here’s an outlook for the Canadian events, and an updated technical analysis for USD/CAD.
The lack of QE3 in Bernanke’s statement and especially the comment about downside risks to the economy weighed heavily on the loonie. This was exacerbated by the accompanying fall in oil prices. Last week Inflation rates increased but retail sales contracted due to a reduced demand for automobile, Core retail sales remained flat indicating less activity in the market. Will this trend continue?
USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
- Mark Carney speaks: Sunday, 12:30. BOC governor Mark Carney is scheduled to speak in Washington DC. He may speak about the grim outlook for the world economy amid the slowdown in the US economy and The debt crisis in Europe.
- RMPI and IPPI: Thursday, 12:30. Raw Materials Price Index dropped 1.2% in July after 2.4% decrease in the previous month while Industrial Product Price Index declined by 0.3% following 0.2% decrease in the June. The major contributors to the drop were energy prices such as mineral fuels. RMPI is expected to drop further by 1.1% while IPPI is expected to decrease by 0.4%.
- GDP: Friday, 12:30. Bright news for the GDP after a 0.2% rise in June compared to 0.3% drop in the previous month indicating expansion in the market. Another rise of 0.3% is predicted now.
*All times are GMT.
USD/CAD Technical Analysis
Dollar/CAD began the week with a dip lower to support at 0.9780 (a new line that didn’t appear last week). From there, the story was totally different. After crossing parity, the run was quick and the run stopped only under the 1.0373 line, last seen in October 2010.
Technical lines, from top to bottom:
We start from the high level of 1.0750, which capped the pair several times in the past, the last being May 2010. Next, we also have a multiple and strong resistance line at 1.0677, last seen in August 2010.
1.0510 is a minor resistance line that was pivotal around the same time and was a point of resistance before the pair fell. 1.0373 capped the pair several times back in October 2010 and is of high importance.
1.03 is a minor line that the pair struggled with. The round 1.02 line capped the pair at the end of 2010 and was the low of 2009. It already managed to switch positions and is important/
1.0080 is another minor line was pivotal at the end of 2010. The very round number of USD/CAD parity is a clear line of course, and it will be closely watched on a potential downfall.
Under parity, 0.9915 was a peak back in June and is now minor support, after being run through recently. The last line for now is 0.9780, where the current run began.
I am bullish on USD/CAD.
The bearish outlook for the US means a bearish outlook for Canada and a weaker loonie. Canadian consumer prices are rising, but this is unlikely to deter the central bank from cutting rates at these times of trouble. With WTI Crude Oil also severely hit, Canadian bears are on the move.
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 New Zealand dollar (kiwi), read the NZD forecast.
- For USD/CAD (loonie), check out the Canadian dollar
- For the Swiss Franc, see the USD/CHF forecast.
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