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USD/CAD reversed directions this week,  as the pair posted modest  gains. USD/CAD closed the week at 1.0512. This week’s highlight is GDP. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

The Canadian dollar lost ground late in the week following a strong US Unemployment Claims release. Canadian data did not impress, with Core Retail Sales falling short of the estimate.

[do action=”autoupdate” tag=”USDCADUpdate”/]

USD/CAD daily chart with support and resistance lines on it. Click to enlarge:   USD CAD Outlook Nov 25-29

 

  1. Corporate Profits: Wednesday, 13:30.   Corporate Profits, released each quarter  can be an important gauge of business spending and hiring, which is critical for economic growth. The indicator has looked sluggish, posting two straight declines. The markets will be looking for some improvement for Q3.
  2. Current Account: Thursday, 13:30. Current Account is released each quarter. This indicator is closely related to currency demand, as a higher surplus indicates more demand from foreigners for Canadian dollars. Canada continues to post monthly deficits, although the past two releases have beaten the estimates. No significant change is expected in the October reading, with an estimate of -C$14.3 billion.
  3. RMPI: Thursday, 13:30. The Raw Materials Price Index is an important gauge of inflation in the manufacturing sector. The index disappointed in September, posting a decline of 1.5%. This was well below the estimate of -0.4%. The markets are braced for another sharp decline, with an estimate standing at -2.1% for October.
  4. GDP: Friday, 13:30. The week wraps up with the GDP release, one of the most important economic events on the calendar. Unlike many other countries, Canada releases GDP on a monthly basis. In September, Canadian GDP dropped to 0.3% from 0.6% a month earlier,  but the loonie managed to post gains as this beat the estimate of 0.2%. The markets are expecting another weak reading this week, with an estimate of just 0.1%. Will the indicator again beat this month’s prediction?

* All times are GMT.

 

USD/CAD Technical Analysis

USD/CAD opened the week at 1.0439 and  dropped to a low  of 1.0415. The pair then reversed directions,  barreling past  the  1.05 line  and touching a high of 1.0569. The pair closed the week at 1.0512, as resistance at 1.0523 (discussed last week) remained intact.

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

 

Technical lines, from top to bottom:

We  begin with resistance at 1.0945, which is protecting the key 1.10 level. This line has not been tested since September 2009.

Next is resistance at 1.0853. This line has held firm since May 2010.

1.0723 was a cap in mid-2010, before the US dollar tumbled and dropped all the way into 0.93 territory.

1.0660 is an important resistance line which was last tested in September 2010.

1.0523 was a peak back in November 2011. This line saw some action in early September and was briefly breached by the pair  last week. It begins the week as weak resistance, and could again come under strong pressure if the US dollar moves upwards.

1.0446 continues to switch roles. This line started the week as weak resistance but  failed  to hold late  in the week as the  pair pushed higher.  It is back in a support role and could see action early in  the week,

1.0340 had a busy October, and has some breathing room as the pair trades at higher levels. 1.0250 is next. This line has held firm since mid-September.

1.0180 provided support for the pair during March, and saw a lot of activity in the first half of June. It remains a strong support line.

The round number of 1.01 was a trough back in July 2012 and switched to resistance afterwards. The line proved its strength several times in 2013, most recently in mid-May.

1.0050 provided support for the pair in May 2013 and on other occasions beforehand. It remains a barrier before parity. The very round number of parity is a clear line and has not been tested since mid-February.

The final support line for now is 0.9910. It was last tested in January, which marked the start of a strong US dollar rally which saw USD/CAD climb to the mid-1.03 range.

 

I am  bullish on USD/CAD

The Canadian dollar remains under pressure as USD/CAD  pushed higher and closed above the 1.05 level. Last week’s strong Unemployment Claims release helped the greenback and the Federal Reserve has said that QE is likely coming in a few months, which has helped  boost the  US dollar.

Further reading: