Search ForexCrunch

Looking for the latest outlook for this week? Check the full section: Canadian Dollar Forecast

A busy week left the Canadian dollar weaker, returning to its previous range. The upcoming week is more light, and consists mostly of the Canadian GDP. Here’s a quick outlook for the events in Canada and an updated technical analysis for USD/CAD.

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

Mark Carney disappointed by leaving the current policy unchanged. A rate hike can be expected only around June. He probably needs a weaker C$ for helping the recovery. Let’s start the outlook:

  1. GDP: Published on Friday at 13:30 GMT. Canada is special with its monthly GDP release. This release is for the month of November 2009, in the fourth quarter. Canada exited recession in Q3, and continued to show growth in Q4, with a growth of 0.2% in October. A growth rate of 0.3% is expected now, continuing the steady and healthy recovery of Canada from the global crisis, as also reflected in the Canadian job market. USD/CAD will shake around this release also due to the American Advance GDP due at the same time.
  2. RMPI: Published on Friday at 13:30 GMT. Overshadowed by other events, the Raw Materials Price Index is important after Canada’s inflation fell. In the past two months, RMPI rose by 2.5% and 2.2%. A more modest rise is predicted this time.

USD/CAD Technical Analysis

The Canadian dollar lost the lower trading range of the recent period by jumping above 1.04. It now returns to the previous trading range of 1.04 to 1.0750, mentioned in the previous outlook.

1.04 proved to be a significant and clear support and resistance line. It now returns to its role as a support line. 1.0750 was tested more than once as a resistance line last time USD/CAD was in this range.

Above, 1.0850 was the previous peak for the pair and is a minor resistance line. Even higher, a strengthening greenback will meet the 1.1130 line which was a successful resistance line many times in the past.

Looking down, 1.02 remains the next support line, serving as the bottom line for the range and the 2009 low. Parity is below, and isn’t expected to be tested soon.

I’m back to neutral on USD/CAD.

The dovish rate decision followed by weak inflation badly hurt the loonie, and it has no advantage over other currencies in the near future. Strong GDP is necessary for returning to the USD/CAD bearish sentiment.

Further reading:

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.