The Canadian dollar had an exciting week. It managed to put up a fight to the strength of the US dollar, thanks to excellent jobs data from Canada and eventually only lost a few pips to the greenback. The upcoming week is relatively light in events, but market action continues. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.
After a period of not too many good news, Canada’s jobs report for February was fabulous: a gain of 50.7K jobs. In addition, Canada maintained the low unemployment rate of 7%. In the US, the NFP was good as well, and the dollar gained nicely. Only the loonie was alone in putting up a fight. This came after another relatively dovish rate statement from the BOC, as Carney prepares to cross the Atlantic.
Updates: It is a quiet week for Canadian releases, with none until Thursday. The Canadian dollar continues to edge higher. USD/CAD as trading at 1.0267. NHPI came in at 01.%, matching the forecast. Capacity Utilization Rate showed almost no change, at 80.7%. The estimate stood at 80.8%. USD/CAD remains rangebound, as the pair was trading at 1.0264.
USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
- NHPI: Thursday, 12:30. The new housing price index rose by o.2% in the previous month and is now expected to rise by 0.3%. A faster rise will serve as an indication that the housing sector is not falling too fast.
- Capacity Utilization Rate: Thursday, 12:30. Canada utilizes more of its resources than the US, currently standing on 80.9%. A small rise to 81.3% is predicted for the fourth quarter of 2012.
* All times are GMT.
USD/CAD Technical Analysis
$/CAD began the week with another run on the 1.03 line (mentioned last week) before trading in the 1.0250 to 1.03 range. A move higher made it to 1.0337. A late knee jerk reaction saw a very temporary breach of 1.0250, before the pair returned back to range.
Technical lines, from top to bottom:
1.0750 was the peak of ranges several times in the past few years, and is a very important line. 1.0660 was last seen in September 2011, but this line was also a long running swing high several times beforehand.
1.0523 was a peak back in November 2011 and is minor resistance. 1.0446 was the peak that the pair recorded in June 2012 and is a key line on the upside.
1.0360 was a pivotal line in June 2012 and is now significant resistance. It proved its strength in June 2012. The surges in March 2013 reached 1.0343. The round number of 1.03 was resistance at the beginning of the year and now returns to this role. It worked perfectly well during June – over and over again, until finally being run through. The pair continues struggling with this line.
1.0250 was a peak before the pair moved below parity a long time ago, and worked as support quite well in March 2013. 1.02 was the trough of 2009 and remains important since then, working in both directions. These are the key lines for now.
Another round number, 1.01, was a trough back in July, and switched to resistance afterwards. The line proved its strength several times in 2013. 1.0066 was key support before parity. It’s strength during July 2012 was clearly seen and it gave a fight before surrendering. It has a stronger role after capping the pair during November 2012, but has begun weakening.
The very round number of USD/CAD parity is a clear line of course, and the battle was very clear to see at the beginning of August 2012 and also in 2013. It is a clear separator. 0.9950 provided some support for the pair during November and worked as resistance earlier.
0.9910 remains the chart after serving as a bottom border for the pair in November 2012. It already managed to work as weak resistance in December 2012. 0.9880 showed that it is a clear separator in October 2012. It also had a role in the past. This line switches roles once again.
0.9817 was a stubborn peak in September and is now significant support. As seen in December 2012, this line worked as a cushion. It worked very nicely in January 2013. Lower, 0.9725 worked as strong support back at the fall of 2011 and showed its strength once again in October 2012..
I am neutral on USD/CAD.
The Canadian dollar can take a break from the pressure after the excellent jobs report. However, this may not last too long: the recent GDP was negative and the BOC leans to the downside. The general direction for USD/CAD remains higher, but the pair could remain stable for now.
Further reading:
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro to Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- USD/CAD (loonie), check out the Canadian dollar.
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