GDP is the highlight in the upcoming week of the struggling loonie. Here’s an outlook for Canadian events, and an updated technical analysis for USD.CAD.
USD/CAD daily graph with support and resistance lines marked. Click to enlarge:
In the past week, the Canadian dollar underperformed in comparison to the other important commodity currency – the Aussie.
- RMPI: Wednesday, 12:30. The Raw Materials Price Index is an important gauge for the commodity oriented Canadian economy. After two months of drops, this price index jumped by 1.8% and helped the loonie. Another small rise is expected now.
- GDP: Thursday, 12:30. GDP has slowed down in Q2, after a great Q1. As Canadapublishes GDP on a monthly basis, we’ll get a peak into Q3 with this release for July. It’s expected to negative, with a drop of 0.1%. While this is a small drop, the impact of contraction may significantly weaken the loonie.
- Mark Carney talks: Thursday, 16:50. The governor of the BOC will speak in a conference in Windsor and might shed some light on the next policy steps, as well as his updated view on the economy. Carney usually moves the currency.
Let’s review the events. All times are GMT.
USD/CAD Technical Analysis
USD/CAD was range bound in the past week – between 1.02 and 1.0350 (both mentioned in last week’s outlook). Attempts to break out above or below were short lived, and the pair closed at 1.0238.
1.0350 capped the pair for another week in a row, and is becoming a very strong resistance line. The 1.04 line, immediately above, is a veteran resistance line, which has a minor role now.
Higher, 1.05 held the pair twice during August and is the next line of resistance. Above, the stubborn 1.0680 served as resistance in July and in August, for more than one day in each round.
Above, 1.0750 was a swing high during May and also the limit of a long-term range in 2009. The last line for now is 1.0850, which was also a swing high in May.
Looking down, 1.02, which was the 2009 low, is a very strong support line. Below, 1.01 cushioned a drop in August.
The ultimate line of support is at parity, that got closer in the past week. The year-to-date low of 0.9930 serves as the last resistance line for now.
I’m now bullish on USD/CAD.
The Canadian economy is showing signs of weakening due to the lower interest rate and the slowdown in the US. A negative GDP this week can weaken the loonie, even if the greenback continues sliding around the world.
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/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/USD forecast.
- For the New Zealand dollar (kiwi), read the NZD/USD forecast.
- For USD/CAD (loonie), check out the Canadian dollar forecast.
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