USD/CAD Outlook – May 3-7

After a bad week, the Canadian now dollar expects the important employment figures among other indicators. Here’s an outlook for the Canadian events and an updated technical analysis for USD/CAD.

USD/CAD graph with support and resistance lines marked. Click to enlarge:

Canada mostly suffered from risk aversive trading due to the expanding Greek crisis. But on Friday, weak Canadian GDP also contributed to the loonie’s retreat. Fresh data will set its direction. Let’s start:

1. Building Permits: Published on Thursday at 12:30 GMT. This important indicator leaped 5 months ago, and has been falling short of expectations since then. Two consecutive months of drop will probably be followed with a rise this time – showing that the housing sector is aligning with other factor of the economy.
2. Ivey PMI: Published on Thursday at 14:00 GMT. The Richard Ivey School of Business’ important index recovered from a drop at the beginning of the year and reached 57.8 points – the highest since October. It’s predicted to edge up to 59.3 points and support the loonie.
3. John Murray talks: Starts speaking on Friday at 2:00 GMT. A rate hike in Canada is imminent, yet the timing – June 1st or July 20th is still a mystery. BOC Deputy Governor John Murray could shed some light on this issue.
4. Employment data: Published on Friday at 11:00 GMT. Canada’s job figures disappointed last month – the unemployment rate remained at 8.2% and didn’t drop. Also the employment change number showed a smaller-than-expected rise in jobs. the unemployment rate isn’t expected to move, but a rise of 20.3K jobs that is predicted will probably help the loonie. This can boost  the Canadian dollar in this release – 90 minutes before the American Non-Farm Payrolls.

USD/CAD Technical Analysis

After closing below parity last week, USD/CAD rose above this critical line and made a first test to break the 1.02 line. It then fell towards parity and rose again to close at 1.0176.

The lines haven’t changed since last week’s outlook. The current range of the pair will continue to be 1.0000 to 1.0200. The resistance line at 1.01 is a very minor one. 1.02 was the 2009 low.

Above, 1.03 was a swing high before USD/CAD approached. Above, 1.04 was the bottom border of a long time range and provides strong resistance.

Below parity, 0.98 is the next line of support, being a support line during the last period that the pair was below parity. 0.97 is a stronger line below.

I remain bearish on USD/CAD

Despite the weaker GDP in February, the upcoming rate hike and the overall situation of the Canadian economy continue pointing the direction of the pair.

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 the British Pound, look into the  GBP/USD forecast.
• For the Australian dollar, read the  AUD/USD forecast.
• For USD/CAD, check out the  Canadian dollar forecast.
• For the kiwi, here’s the  NZD/USD forecast.

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