The Canadian dollar showed strength and made gains on a week with many events that met expectations. The Canadian calendar is rather light in the upcoming week, so the outlook will be mostly technical, for USD/CAD.
USD/CAD graph with support and resistance lines marked. Click to enlarge:
The loonie enjoyed the unwinding Greek crisis to receive the correct attention it deserves and make gains, despite no acceleration in inflation. The next barrier is very close. Let’s start:
- Paul Jenkins talks: He begins his speech on Monday at 19:30 GMT. BOC Senior Deputy Governor Paul Jenkins is an influential member of the BOC, and he might say something about the rate policy. If so, the loonie will shake.
- Corporate Profits: Published on Wednesday at 13:30 GMT. This indicator doesn’t always impact the loonie, but it might empower it this time. Canadian corporate profits returned to growth in Q3 after 3 quarters of contraction. The rise of 7.6% in the previous quarter is expected to followed by a smaller rise, but will still indicate the stable nature of the economy.
- Current Account: Published on Friday at 13:30 GMT. Canada’s trade balance is almost fully balanced, but the wider figure, current account, has been negative in the past year. The deficit expanded to 13 billion in Q3, and is expected to squeeze under 10 billion this time.
USD/CAD Technical Analysis
After ending the previous week under 1.0530, USD/CAD continued south and flirted with the major support line of 1.04 near the end of the week.
This 1.04 line, mentioned in last week’s outlook and also beforehand, continues to play a big role. With a close barely above this line, USD/CAD could break it early next week.
Below 1.04, the 2009 low of 1.02 is the next support line. It was tested again just a few weeks ago. Ultimate support appears at 1.0000 – USD/CAD parity. It probably won’t be seen this week.
Looking up, 1.0530 is a minor resistance line. More significant support appears at 1.0780, the top border of USD/CAD’s extended range.
Further above, 1.0850 was the peak before the pair entered this range. Even higher, 1.1130 was a significant resistance line more than once, but it’s now far away.
I remain bearish on USD/CAD.
The Canadian fundamentals continue to support the loonie, especially the great job market. A breach of 1.04 should lead to further drops, despite Bernanke’s moves.
Further reading:
- For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
- For the Euro, read the EUR USD Forecast.
- For GBP/USD, look into the British Pound forecast.
- For the Australian dollar, read the AUD/USD forecast.
- For USD/CAD, check out the Canadian dollar forecast.
Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.
Share
