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The Canadian dollar retreated against the greenback on a wild week  but was less damaged than other currencies. The upcoming week provides a double-feature trade balance release among other events. Here’s an updated outlook for Canadian events and an updated technical analysis for USD/CAD.

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

USD/CAD Forecast

Canadian employment figures were excellent, with a nice drop in the unemployment rate to 8.3% and a nice gain in jobs. This saved USD/CAD from rising above 1.0750 while the dollar was raging after the NFP. This will be felt also in the upcoming week. Let’s start the review:

  1. Housing Starts: Published on Monday at 13:15 GMT. Last week’s Building Permits rose by a lower-than-expected scale, far from the huge leap seen two months ago. This related housing number, housing starts posted a nice surprise last month, rising to 175K. This time, the number is predicted to edge up to 180K. This usually has a significant impact on the loonie.
  2. BOC Deputy Governor Pierre Duguay talks: As the deputy to Mark Carney, Duguay has a strong influence on the bank’s policy. The last rate decision didn’t see a change in the schedule for a rate hike. Duguay might relate to this decision.
  3. Trade Balance: Published on Wednesday at 13:30 GMT, together with the American trade balance. Canada’s balance is almost totally balanced – a small deficit of 0.3 billion was seen last month, following a surplus of the same scale. A smaller deficit is predicted this time, only 0.1 billion. The simultaneous release of the American and Canadian figures means a volatile time for USD/CAD.
  4. NHPI: Published on Thursday at 13:30 GMT. The New Housing Price Index posted small and steady gains in the past 5 months, with a neat 0.4% rise last month. A rise of the same scale is predicted this time as well.

USD/CAD Technical Analysis

The Canadian dollar had a good start to the week, with USD/CAD reaching down to 1.0540, which is a new line of the graph. It later went up and pushed the limits of th 1.0750 line from last week’s outlook. I’ve now moved the line to a safer spot – 1.0780.

The close around 1.07 means that the loonie didn’t lose the wider range. The bottom of the range is at 1.04, a line that was tested many times. Below that, 1.02 was the 2009 low and was tested a few weeks ago as well.

Looking up, 1.0850 was the previous top before the loonie entered the range. Even higher, 1.1130 is a very important resistance line, tested several times in 2009.

I remain bearish on USD/CAD

The rise of USD/CAD comes only from the dollar’s strength. This strength wasn’t enough to make the pair lose the current range. The excellent Canadian job figures proved again that the Canadian economy is doing well.

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