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The Canadian dollar got caught in the US dollar tidal wave last week, as USD/CAD  climbed almost 300 points.  The pair closed at 1.0455.  This week’s major event is GDP. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

The US dollar made steady gains against the Canadian currency last week. The US dollar was broadly stronger following the Fed comments that QE would likely be tapered this year, and the Canadian dollar took another hit after Friday’s release of disappointing Canadian retail sales and CPI numbers.

Updates:

 

USD/CAD daily chart with support and resistance lines on it. Click to enlarge:   USD CAD  Forecast June 24-28

 

  1. BOC Deputy Governor Timothy Lane Speaks: Wednesday, 16:00. Deputy Governor Lane will discuss shadow banking at a financial forum in Toronto. Analysts will be listening carefully for any hints regarding future monetary policy, especially with  a new Governor  taking the  reins of  the BOC.  A speech which is more hawkish than expected is bullish for the Canadian dollar.
  2. GDP: Friday, 12:30.  GDP is one of the most important economic indicators, and an unexpected reading could affect the movement of USD/CAD. Canadian GDP is  released every month. The indicator has been steady over the past several readings, and posted a gain of 0.2% in the May release. The markets are expecting a weaker reading this time around, with an estimate of 0.0%.
  3. RMPI: Friday, 12:30.  This inflation indicator looks at the change in price of raw materials purchased by manufacturers. The indicator has   posted two straight declines, both of which were well below the estimate. The markets are anticipating a turnaround in the June releases, with an estimate of 2.3%.

* All times are GMT

USD/CAD Technical Analysis

Dollar/CAD started the week  at 1.0160. The pair  touched a low of  1.0150  early in the week, and then  shot higher, climbing as high as 1.0489. USD/CAD  closed out the week at 1.0455.

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

Technical lines, from top to bottom:

With USD/CAD moving sharply higher, we start at higher levels.    1.1028 is providing strong resistance. This  is followed by 1.0853, which has held steady since September 2009.

1.0705 saw a lot of action in  January 2010, but  has quietly provided resistance since then. Next, 1.0652 has been providing resistance since early September 2010. This marked a peak as USD/CAD went on a steep slide, falling as low as the 95 line.

1.0523 was a peak back in November 2011 and continues to provide resistance. However, this line has weakened and could face more pressure if the US dollar  continues to post gains.

1.0446 which was the peak that the pair recorded in June 2012, finds itself in an unfamiliar support role. This weak line could be tested early next week.

The line of  1.0340 was in a support role in early June,  and is  back as a support level. This is followed by 1.0285, which broke as USD/CAD surged higher.

1.0180 began last week as weak resistance,  and  has reverted to providing support.

The round number of 1.01 was a trough back in July, and switched to resistance afterwards. It has reverted  back to a support line, and has held firm since mid-May.

1.0050 provided support for the pair in May 2013 and in other occasions beforehand. It remains a barrier before parity. The very round number of USD/CAD parity is a clear separator, and the battle was very clear to see at the beginning of August 2012 and also in 2013.

The final support line for now is 0.9950. This line  provided some support for the pair during November and worked as resistance earlier.

I  am  bullish  on USD/CAD

The Canadian dollar was hit hard by a double blow last week. First, the US dollar  was broadly stronger  after the Fed announcement about QE.  The loonie lost more ground after Canadian key releases missed their estimates. The fallout from QE may not be over, and an unimpressive Canadian GDP could send the pair  higher.

 Further reading: