USD/CAD Outlook – August 9-13

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A few interesting releases expect the loonie. Here’s an outlook for the Canadian events, and an updated technical analysis for USD/CAD.

USD/CAD chart with support and resistance lines marked. Click to enlarge:

Canadian Dollar Forecast

Canada’s employment figures were very disappointing, and only a bigger disappointment in Non-Farm Payrolls from the US stopped USD/CAD from going higher. Let’s start:

  1. Housing Starts: Published on Tuesday at 12:30 GMT. This important housing sector figure always rocks the loonie. After peaking at 201K, the annualized number of starts fell to 193K. A small rise is expected this time. A jump back above 200K will sure help the loonie, but expectations are low – 185K.
  2. NHPI: Published on Tuesday at 12:30 GMT. The New Housing Price Index is a very steady indicator – it rose by 0.3% each time in the past three month, showing the stability of the housing sector. A rise in a smaller scale will probably be seen now. Note that this publication is slightly overshadowed by the housing starts number.
  3. Trade Balance: Published on Wednesday at 12:30 GMT. Canada’s balance dropped to a deficit last month – of 500 million, after previous months that showed a surplus, at least in the first release. A surplus of 400 million is expected now. This figure is release simultaneously with the American trade balance, that stands on a deficit of over 40 billion. This double-feature releases means high volatility for USD/CAD.
  4. New Motor Vehicle Sales: Published on Friday at 12:30 GMT. After two weak months that saw big drops in vehicle sales, this consumer indicator rose by 0.2% last month. A bigger increase is due now – 2.1%.

USD/CAD Technical Analysis

Tight range trading, between 1.0280 and 1.02 characterized the pair’s trading at the beginning of the week. It then broke below 1.02 and got close to the next support line of 1.01 before bouncing back up and closing at 1.0270.

Most lines haven’t changed since last week’s outlook. USD/CAD is back to the 1.02 – 1.0280 range. Above 1.0280, the next line of resistance is 1.04.

1.04 was the long term support line of the 1.04 to 1.0750 range, and now works as a tough resistance line. Above, 1.0550 stopped the pair several times in the past, and is a minor resistance line.

The next line of resistance is at 1.0680, which stubbornly held the pair in June and several times in July. Apart from being the long term top border of the range, 1.0750 was also tested in May. Above, 1.0850 was a swing high in 2009 and a swing high in May as well.

Looking down under 1.0280, the 2009 low of 1.02 is the next support line. Note that it also worked as resistance after the pair hit parity in April. Lower, 1.01 is a minor line of resistance, and it’s followed by the ultimate support line – parity.

I remain bearish on USD/CAD.

Despite the blow from the employment figures, the situation in Canada is still great, and the Federal Reserve could weaken the greenback, sending USD/CAD for another attempt on parity.

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

5 Comments

  1. Pingback: Gbpcad: Dead Horse, Or Cash Machine?

  2. Ejaz Ahmad on

    Ok I am not the one who trade in USD/CAD pair.I did analysis for the sake of this comment believe me!as far short term concerned the pair may be bearish but medium term it would be bullish until 1.04 range.On other hand fundamentally the pair USD/CAD depends upon oil prices I think u must consider the Oil related chart

  3. charles umah on

    when u say that d usd/cad pair depends upon oil prices, pls explain to me how these two are correlated, i.e, if d oil prices goes up, then what happeens to d pair?

  4. Thanks for your comment Charles. Canada exports a lot of oil. Higher oil prices = more revenue for Canada. So, higher oil prices are good for Canada and the Canadian dollar. Lower oil prices are bad for the Canadian economy and the Canadian economy.