The Canadian dollar couldn’t withstand the strength of the greenback and USD/CAD got close to parity once again. Housing and employment data are the major events this week. Here’s an outlook for the Canadian events and an updated technical analysis for the USD/CAD. Last week Canadian economy shrank unexpectedly by 0.2% while growth of 0.2% was predicted diminishing speculations for possible rate hikes. It is also predicted that the first quarter growth rate will be below the 2.5% predicted earlier by the BOC. Is the Canadian economy facing a temporary setback or are we to expect other soft readings? US Non-Farm Payrolls still grew and show demand from the US – demand which is critical to Canada. Updates: The loonie took a hit as Ivey PMI was a major disappointment. The index posted a weak reading of 52.9 points, way below the market estimate of 62.6. This was the worst performance since August 2011. USD/CAD moved closer to the parity level, trading at 0.9961. Building Permits, a key indicator, will be released later on Monday. Building Permits declined last month, but the indicator still posted a rise of 4.2%, which was much better than the -0.5% figure predicted by the markets. USD/CAD continues to edge towards parity, as the pair was trading at 0.9978. Housing Starts surprised the market by jumping to a four-year high. The reading of 245K easily surpassed the market estimate of 204K. The good news failed to help the loonie, as the US/CAD crossed the parity line, and was trading at 1.0037. This loonie has not been this low since mid-April. USD/CAD moved downwards, as the pair was trading at 1.0014. We could see further movement around the parity level. The markets are waiting for the release of Trade Balance later on Thursday. The forecast calls for a stronger reading this month, of 0.7B. NHPI will be released at the same time. The market estimate stands at 0.2%. USD/CAD daily chart with support and resistance lines on it. Click to enlarge: Building Permits: Monday, 12:30.Canada’s housing industry has rebounded in February after a slow start with the total increase of 7.5% in the value of building permits while analysts predicted a smaller rise of 2.6%. This increase followed a 11.4% decline in the previous month. Non-residential permits soared 36.2%. Plans for industrial buildings edged up 151% to a one-year high suggesting a welcome improvement in the housing industry. Another nice rise of 2.3% is expected now. John Murray speaks: Monday, 9:30. John Murray Deputy Governor of the BOC will give a lecture inVancouver. Important information regarding future monetary policy and interest rates could be revealed. Housing Starts: Tuesday, 12:15. The annual rate of housing starts increased in March to 215,600 compared to 205,300 units in February. The rise was accounted for an upward movement in multiple starts in Ontario and the Prairies. This positive figures suggest a recovery in the building sector. An increase of 206,000 is expected this time. Trade Balance: Thursday, 12:30.Canada’s trade surplus narrowed unexpectedly in February to $292-million from $1.95-billion in January amid a drop in exports an unexpected rise in imports. Analysts predicted a smaller decline to $2.2 billion. Exports fell 3.9% while imports rose 0.2%. Surplus is expected to climb this time reaching $800 million. Employment data: Thursday, 12:30.Canada’s economy added 82,000 jobs in March, following four disappointing months of declines. The main growth occurred in the private sector hiring. This intensive rise in jobs lowered unemployment rate to 7.2% from 7.4% in February indicating a real improvement in the Canadian labor market. Economists expected a much lower rise of 11,300 jobs in March. However the latest improvement could be balancing the recent drops in the last four months and does not necessarily reflect on the total job gains in 2012. An increase of 12,900 positions is expected while unemployment rate is predicted to reach 7.3%. * All times are GMT. USD/CAD Technical Analysis $/C$ started the week tried to struggle and move below the 0.98 line (mentioned last week) without success. This ended in a leap upwards and the pair stopped at 0.99. It then traded in a range before jumping and closing at 0.9957. The break over 0.9950 is not confirmed yet. Technical lines, from top to bottom: 1.0263 is the peak of surges during the last quarter of 2011, but was damaged after the move higher. It’s far at the moment. The round figure of 1.02 was a cushion when the pair dropped in November, and also the 2009 trough. It is weaker now but remains pivotal. 1.0143 was a swing low in September and worked as resistance several times afterwards. In the battle lines around parity, 1.0050 was tough resistance in April 2012. Very close by, 1.0030 capped the pair twice in March 2012 and is stronger after a successful challenge in April 2012. The very round number of USD/CAD parity is a clear line of course, and the battle seems to be over for now, after another attempt to rise ended in a big downfall. Under parity, we meet another pivotal line at 0.9950. It served as a top border to range trading in March 2012 and later as a line in the middle of the range. 0.99, the round number is now present on the graph after capping the pair in May 2012. 0.9840 provided support for the pair during September and was reduced to a minor line now. The round number of 0.98 is key support that was tested twice during the downfall. It’s strong. The next line is 0.9736, which provided support during August 2011. The veteran 0.9667 line worked as support at the beginning of 2011 and then for several months during the spring. It is a very clear and strong line on the chart. I remain bearish on USD/CAD. The drop in oil prices certainly weighs on the loonie. Nevertheless, Canada’s strong employment figures and a still growing US economy support the pair. USD/CAD parity is a serious challenge. 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. For the New Zealand Dollar (kiwi), read the NZD forecast. For USD/CAD (loonie), check out the Canadian dollar forecast For the Swiss Franc, see the USD/CHF forecast Anat Dror Anat Dror Anat Dror Senior Writer I conceptualize, design and create multi-lingual websites. Apart from the technical work, my projects usually consist of writing content for these sites in English, French and Hebrew. In the past, I have built, managed and marketed an e-learning center for language studies, including moderating a live community of students. I've also worked as a community organizer Anat's Google Profile View All Post By Anat Dror Canadian Dollar ForecastMinors share Read Next USD/CHF Outlook May 7-11 Kenny Fisher 10 years The Canadian dollar couldn't withstand the strength of the greenback and USD/CAD got close to parity once again. Housing and employment data are the major events this week. Here's an outlook for the Canadian events and an updated technical analysis for the USD/CAD. Last week Canadian economy shrank unexpectedly by 0.2% while growth of 0.2% was predicted diminishing speculations for possible rate hikes. It is also predicted that the first quarter growth rate will be below the 2.5% predicted earlier by the BOC. Is the Canadian economy facing a temporary setback or are we to expect other soft readings? 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