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USD/CAD posted modest gains, as the Canadian dollar remains under pressure. The pair closed the week above the 1.06 line. The upcoming week has a host of key releases, including the BOC Overnight Rate and Employment Change. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

US Unemployment Claims continues to look solid, while Canadian GDP posted a modest gain. Canadian   Current Account disappointed, as the deficit rose to a three-month high.

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

USD/CAD daily chart with support and resistance lines on it. Click to enlarge:     EUR USD Forecast Dec. 2-6

 

  1. Trade Balance: Wednesday, 13:30.   Trade Balance is closely linked to currency demand, as foreigners need to purchase Canadian dollars in order to buy Canadian exports. Canada continues to post monthly deficits, although last month’s deficit narrowed to -0.4 billion, dollars,  down from -1.3 billion in October. The estimate for this month stands at -0.7 billion.
  2. BOC Overnight Rate: Wednesday, 15:00. The Bank of Canada’s benchmark interest rate has been pegged at 1.00% for over two years, and no change is expected to this month’s level. The Bank will announce the new rate its Rate Statement.
  3. Building Permits: Thursday, 13:30. Building Permits tends to show sharp fluctuations, which often leads to estimates which are widely off the mark. After a huge decline in September, the indicator bounced back with a modest gain of 1.7% in October. However, this was well short of the estimate of 7.8%. The forecast for the upcoming release stands at 2.4%.
  4. Ivey PMI:  Thursday, 15:00. This key index shot up to 62.8 points in October, up from 51.9 the month before. This easily beat the estimate of 54.7 points. Another strong reading is expected in November, with an estimate of 60.2 points. Will the indicator repeat with a higher reading than expected?
  5. Employment Change:  Friday, 13:30. Employment Change is one of the most important indicators and can have a major impact on USD/CAD. The indicator has posted three straight gains, and last month’s figure of 13.2 thousand beat the estimate of 12.7. The markets are expecting a weaker gain for October, with an estimate of 7.6 thousand.  The Unemployment Rate of 6.9% is expected to edge upwards to 7.0%.
  6. Labor Productivity:  Friday, 13:30. This indicator is closely linked to inflation and is released each quarter, magnifying the impact of each release. The estimate for the November reading stands at 0.5%, the same as the gain which was recorded in October.

* All times are GMT.

 

USD/CAD Technical Analysis

USD/CAD opened the week at 1.0548 and  dropped to a low  of 1.0520, breaking  through support at 1.0523 (discussed last week).  The pair then reversed directions,  barreling past  the  1.06 line  and touching a high of 1.0628. The pair closed the week at 1.0606.

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

 

Technical lines, from top to bottom:

We  start with resistance at 1.0945, which is protecting the key 1.10 level. This line has not been tested since September 2009.

Next is resistance at 1.0853. This line has held firm since May 2010.

1.0723 was a cap in mid-2010, before the US dollar tumbled and dropped all the way into 0.93 territory.

1.0660 is an important resistance line which was last tested in September 2010. This line could face some pressure during the week if the US dollar continues to move to higher ground.

1.0523 was a peak back in November 2011. This line saw some action in early September has reverted to a support role following the pair’s gains this week.

1.0446 continues to provide support. This line has some breathing room as the USD/CAD trades at higher levels.

1.0340 had a busy October and is providing strong support. 1.0250 is next. This line has held firm since mid-September.

1.0180 provided support for the pair during March, and saw a lot of activity in the first half of June. It remains a strong support line.

The round number of 1.01 was a trough back in July 2012 and switched to resistance afterwards. The line proved its strength several times in 2013, most recently in mid-May.

1.0050 provided support for the pair in May 2013 and on other occasions beforehand. It remains a barrier before parity. The very round number of parity is a clear line and has not been tested since mid-February.

The final support line for now is 0.9910. It was last tested in January, which marked the start of a strong US dollar rally which saw USD/CAD climb to the mid-1.03 range.

 

I am  bullish on USD/CAD

The Canadian dollar remains under pressure as USD/CAD continues to rise and will start the week above the 1.06 line. With a host of Canadian key  events on the schedule, the loonie could continue to lose ground if  these  releases  fail to meet  market  expectations.

Further reading: