USD/CAD Weekly Technical Forecast (SEP 20-24 2010)

Retail sales and inflation data are among the highlights of this week’s Canadian events. Here’s an outlook for the events that will shape the Canadian dollar’s trading, and an updated technical analysis for USD/CAD, now in lower ground.

USD/CAD daily chart with support and resistance lines on it. Click to enlarge



The US dollar retreated on the speculation that one more trillion dollars will be allocated for Quantitative Easing. The Canadian dollar enjoyed this, similar to other currencies. Will the pair advance to parity? Let’s start:

1. Foreign Securities Purchases: Monday, 12:30. The net value of purchases by foreigners serves as a gauge of confidence for the Canadian economy. Last month saw a plunge from 23 to 5.4 billion, worse than expected. This time, the value will probably be higher – 8.1 billion.


2. Wholesale Sales: Monday, 12:30. This indicator gives us a view at the back end of the economy – the wholesalers. Last month’s drop of 0.3% was far worse than a rise of 0.4% that was expected, and weighed very heavily on the loonie. A +0.6% correction is expected this time and should push currency higher.


3. CPI: Tuesday, 11:00. After three rate hikes, a significant rise in inflation is needed to bring about the next move. While consumer prices surprised with a 0.5% rise last month, Core CPI dropped, signalling that the rise was temporary. CPI will probably rise now by 0.2%, but Core CPI is expected to remain unchanged. Only a significant rise above 0.5% in both of them will trigger a jump in the loonie.


4. Retail Sales: Wednesday, 12:30. This important consumer indicator disappointed in the past three months and saw a squeeze. Also here, similar to wholesale sales, a correction is expected, +0.4%. Core retail sales, no less important, followed the same pattern of disappointing drops, and are also expected to recover now by 0.5%.


5. Leading Index: Wednesday, 12:30. 10 economic indicators are used to build this index, with most of them already being released. Nevertheless, it usually has a strong impact. Lat month’s 0.4% rise fell short of expectations. A faster growth rate is expected now, of 0.6%.

USD/CAD Technical Analysis

USD/CAD dropped below 1.0350 at the beginning of the week and descended through the 1.0280 line (appeared in last week’s outlook) to 1.02. It then bounced back up, and a second attempt to break below 1.02 also failed. It finally closed higher, at 1.0325.

The pair currently trades between 1.0280, which was a strong support line in July, and 1.0350, which capped its gains in the past week.

Higher, 1.05 held the pair twice during August and is the next line of resistance. Above, the stubborn 1.0680 worked 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 top border 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, strengthened in the past week, as it served as a double-bottom. Below, 1.01 cushioned a drop in August.

The ultimate line of support is at parity, that got closer in the past week. The lines below parity are 0.98 and 0.97.

I remain bearish on USD/CAD.

Canada’s healthy economy supports a stronger currency, despite the weakness of its main trade partner – the US.

USD/CAD Weekly Technical Forecast (SEP 13-17 2010)

The Canadian dollar had a busy and positive week, and will now have a lighter one – a week in which technicals will have more impact. Here’s an outlook for the Canadian events and an updated technical analysis for USD/CAD, now at lower ground.

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



The third rate hike in Canada wasn’t fully priced, and the release boosted the Canadian dollar. Employment data was also better than predicted and helped push USD/CAD lower. This week, quarterly figures will provide a long term view.

1. Labor Productivity: Published on Tuesday 12:30. This quarterly release comes rather late. Nevertheless, it’s of high importance and rocks the loonie. In Q1, productivity rose by only 0.7%, half of early expectations. This was good for the Canadian dollar, as low productivity means higher salaries – higher inflation. A similar rise in productivity is expected now – 0.9%.


2. Capacity Utilization Rate: Published on Tuesday, 12:30. Utilizing more of the available resources means a stronger economy and a chance of a rate hike to cool it down. In Q1, the utilization rate climbed to 74.2%. A similar rate is expected now.


3. Manufacturing Sales: Published on Wednesday, 12:30. Sales at the gates of manufacturers serve as a good gauge. This stable indicator rose by 0.1% last month, weaker than previous months but exceeding expectations of a drop. Another modest rise is predicted now.

All times are GMT.

USD/CAD Technical Analysis

The Canadian dollar’s week didn’t start of well – An initial drop lower failed and USD/CAD rose to test the 1.05 line (mentioned in last week’s outlook). It then made a sharp drop under 1.04 and tested 1.0280 before closing at 1.0366.

The 1.04 line was the bottom border of a long-term wide range between 1.04 and 1.0750, and now serves as a minor resistance line. Above, 1.05 capped the pair in the past week and also a few weeks ago – it’s now a strong resistance line.

Higher, 1.0680 is a double and stubborn top – it capped USD/CAD at the end of August and also at the beginning of July. Above this line, the pair will meet resistance at 1.0750 which was a resistance line in May last time, and then 1.0850, a swing high in May that also provided resistance back in 2009.

Looking down, 1.0280 supported the pair in July and was also tested in the past week – making it a strong support line. Lower, 1.02 was the 2009 low and also worked as a resistance line after the pair hit parity. It’s now a minor support line.

Lower, the 1.01 line provided support in May and in August and is a strong support line before the ultimate line – parity.

I remain bearish on USD/CAD.

This week’s excellent job figures, among other figures, showed that Canada is on the right track, and will outshine other countries.

USD/CAD Weekly Technical Forecast (SEP 6-10 2010)

A very busy week expects loonie traders, including a rate decision and employment data. Here’s an outlook for the Canadian events, and an updated technical analysis for USD/CAD.

USD/CAD daily graph with support and resistance lines on it. Click to enlarge:



Canadian GDP for the second quarter, completed with the past week’s release for June, was somewhat disappointing, after two great quarters. The overall situation is still good. This week’s 7 important Canadian releases will shed a lot of light on the current situation. Let’s start:

1. Building Permits: Published on Wednesday at 12:30 GMT. This is a volatile, yet important gauge for the Canadian economy. Last month’s 6.5% rise in permits boosted the Canadian dollar and corrected the 8.2% fall that was seen in the previous month. The see-saw is predicted to continue with a drop of 5.8%.


2. Rate decision: Published on Wednesday at 13:00 GMT. There is no clear consensus about this rate decision. After two rate hikes, Mark Carney’s BOC is in a dilemma. On one hand, the economy is doing quite well, and there’s a fear of rising inflation. On the other hand, Canada’s main trader partner, the US, is suffering from a slowdown, that can undermine growth in Canada. So, both an unchanged Overnight Rate of 0.75% and a hike to 1% are equally possible. This means higher than normal volatility around the release. Aslo note the accompanying statement which will indicate future moves. A hike with a statement that there will be a pause from now on can weaken the loonie.


3. Ivey PMI: Published on Wednesday at 14:00 GMT. The Richard Ivey School of Business disappointed in its last release. The score fell to 54 points, showing that purchasing managers see less expansion. A similar number is expected this time. Only a rise above 50 points, as seen three months ago, will boost the loonie.  A rise to 55.8 is expected.


4. Housing Starts: Published on Thursday at 12:15 GMT. Complementing on the figure from the previous day, this housing figure wasn’t too good – it fell for the 4th straight month to 189K, the lowest level since February. Another curb is due now, to 185K.


5. Trade Balance: Published on Thursday at 12:30 GMT. Canada enjoyed a surplus in its trade balance up to April, but the number then turned negative, and even deteriorated to a deficit of 1.1 billion in last month’s release. This deficit will probably squeeze to 0.8 billion. Note that the American trade balance is released at the same time, making the timing very volatile for USD/CAD.


6. NHPI: Published on Thursday at 12:30 GMT. The last housing figure is an official release of the change in prices of new homes. After 3 months of a 0.3% rise, this stable indicator rose by only 0.1% last month. A stronger rise will probably be seen now. Due to the timing of the publication, together with the trade balance, the impact will probably be quite modest.


7. Employment data: Published on Friday at 11:00 GMT. The best is kept for last. After three superb months of big gains in jobs, including a surge of 93K jobs one time, last month saw a correction with a loss of 9300 jobs and a rise of the unemployment rate back to the round number of 8%. A gain of 17.6K in jobs is expected now, but the unemployment rate is likely to remain unchanged at 8%.

USD/CAD Technical Analysis

The Canadian dollar had a bad start to the week – USD/CAD failed to break below 1.05 and jumped towards the stubborn 1.0680 line (mentioned also in last week’s outlook). It then made another failed attempt to go under 1.05, but on Friday, this line finally broke and USD/CAD even extended its fall below the 1.04 line.

USD/CAD now trades between support line of 1.0280 and 1.04, which was a long-term bottom border of wide range. It’s now a minor resistance line.

Looking up, the next resistance line is at 1.05, which worked as a strong support line during most of the past week. Higher, the 1.0680 line was successfully tested for a second week in a row, making it a very strong resistance line.

Above, the 1.0750 line was the top border of a long term range, and also a swing high in May. Another swing high in May, the 1.0850 line, works as the next line of resistance, after working as such back in 2009 as well.

Lower, the 2009 low of 1.02 serves as the next line of support. Below, 1.01 capped the pair after it reached parity in April, and also was a low point a few weeks ago.

The ultimate line of support is parity – which got closer in the past week. Beyond parity, 0.98 and 0.97 provide support. They’re far now.

I remain bearish on USD/CAD.

The improvement in US jobs is good for Canada as well, as the US is Canada’s main trade partner. This week is very important for the loonie. A rate hike and positive job figures can send USD/CAD for another attempt on parity.

USD/CAD Weekly Technical Forecast (SEP 6-10 2010)

A very busy week expects loonie traders, including a rate decision and employment data. Here’s an outlook for the Canadian events, and an updated technical analysis for USD/CAD.

USD/CAD daily graph with support and resistance lines on it. Click to enlarge:



Canadian GDP for the second quarter, completed with the past week’s release for June, was somewhat disappointing, after two great quarters. The overall situation is still good. This week’s 7 important Canadian releases will shed a lot of light on the current situation. Let’s start:

1. Building Permits: Published on Wednesday at 12:30 GMT. This is a volatile, yet important gauge for the Canadian economy. Last month’s 6.5% rise in permits boosted the Canadian dollar and corrected the 8.2% fall that was seen in the previous month. The see-saw is predicted to continue with a drop of 5.8%.


2. Rate decision: Published on Wednesday at 13:00 GMT. There is no clear consensus about this rate decision. After two rate hikes, Mark Carney’s BOC is in a dilemma. On one hand, the economy is doing quite well, and there’s a fear of rising inflation. On the other hand, Canada’s main trader partner, the US, is suffering from a slowdown, that can undermine growth in Canada. So, both an unchanged Overnight Rate of 0.75% and a hike to 1% are equally possible. This means higher than normal volatility around the release. Aslo note the accompanying statement which will indicate future moves. A hike with a statement that there will be a pause from now on can weaken the loonie.


3. Ivey PMI: Published on Wednesday at 14:00 GMT. The Richard Ivey School of Business disappointed in its last release. The score fell to 54 points, showing that purchasing managers see less expansion. A similar number is expected this time. Only a rise above 50 points, as seen three months ago, will boost the loonie.  A rise to 55.8 is expected.


4. Housing Starts: Published on Thursday at 12:15 GMT. Complementing on the figure from the previous day, this housing figure wasn’t too good – it fell for the 4th straight month to 189K, the lowest level since February. Another curb is due now, to 185K.


5. Trade Balance: Published on Thursday at 12:30 GMT. Canada enjoyed a surplus in its trade balance up to April, but the number then turned negative, and even deteriorated to a deficit of 1.1 billion in last month’s release. This deficit will probably squeeze to 0.8 billion. Note that the American trade balance is released at the same time, making the timing very volatile for USD/CAD.


6. NHPI: Published on Thursday at 12:30 GMT. The last housing figure is an official release of the change in prices of new homes. After 3 months of a 0.3% rise, this stable indicator rose by only 0.1% last month. A stronger rise will probably be seen now. Due to the timing of the publication, together with the trade balance, the impact will probably be quite modest.


7. Employment data: Published on Friday at 11:00 GMT. The best is kept for last. After three superb months of big gains in jobs, including a surge of 93K jobs one time, last month saw a correction with a loss of 9300 jobs and a rise of the unemployment rate back to the round number of 8%. A gain of 17.6K in jobs is expected now, but the unemployment rate is likely to remain unchanged at 8%.

USD/CAD Technical Analysis

The Canadian dollar had a bad start to the week – USD/CAD failed to break below 1.05 and jumped towards the stubborn 1.0680 line (mentioned also in last week’s outlook). It then made another failed attempt to go under 1.05, but on Friday, this line finally broke and USD/CAD even extended its fall below the 1.04 line.

USD/CAD now trades between support line of 1.0280 and 1.04, which was a long-term bottom border of wide range. It’s now a minor resistance line.

Looking up, the next resistance line is at 1.05, which worked as a strong support line during most of the past week. Higher, the 1.0680 line was successfully tested for a second week in a row, making it a very strong resistance line.

Above, the 1.0750 line was the top border of a long term range, and also a swing high in May. Another swing high in May, the 1.0850 line, works as the next line of resistance, after working as such back in 2009 as well.

Lower, the 2009 low of 1.02 serves as the next line of support. Below, 1.01 capped the pair after it reached parity in April, and also was a low point a few weeks ago.

The ultimate line of support is parity – which got closer in the past week. Beyond parity, 0.98 and 0.97 provide support. They’re far now.

I remain bearish on USD/CAD.

The improvement in US jobs is good for Canada as well, as the US is Canada’s main trade partner. This week is very important for the loonie. A rate hike and positive job figures can send USD/CAD for another attempt on parity.

USD/CAD Weekly Technical Forecast (Aug 30- Sep 03)

The Canadian dollar expects another rather calm week, but with one key event to rock it – GDP. Here’s an outlook for the Canadian events and an updated technical analysis for USD/CAD, now on higher ground.

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



Weak retail sales and the growing notion of a double dip recession in Canada’s main trade partner – the US, hurt the Canadian dollar. Will it recover? Let’s start:

1. Current Account: Published on Monday at 12:30 GMT. This is a late figure in comparison in comparison with the related trade balance figure, but as its scope is wider and it’s released only per quarter, the loonie tends to shake on this release. Canada’s deficit has significantly squeezed in the past two months and reached 7.8 billion. It’s expected to widen once again to 9.8 billion.


2. RMPI:  published on Monday at 12:30 GMT. As Canada is highly dependent on export of commodities, the Raw Materials Price Index is significant and rocks the currency. A disappointing drop of 0.3% hurt the Canadian dollar last month. It’s expected to be corrected with a rise this time.


3. GDP: Published on Tuesday at 12:30 GMT. Canada’s unique monthly release of the GDP provides action for the USD/CAD more frequently. After a great first quarter, the Canadian economy slowed down in Q2 – stalling in April and only rising by 0.1% in May. The release for June, closing the second quarter and is of high importance. A 0.2% rise is expected. Only a leap back to 0.5% will boost the currency.

USD/CAD Technical Analysis

The Canadian dollar had a bad start to the week – USD/CAD broke above the 1.05 resistance line (mentioned in last week’s outlook) and challenged the 1.0680 twice. Towards the end of the week, USD/CAD dropped and closed just above the 1.05 line.

Looking up, the 1.0680 line became a stronger line of resistance after being tested twice in the past week. It was also a stubborn resistance line at the beginning of July.

Above, the 1.0750 line was the top border of long term resistance line, and also a swing high in May. Another swing high in May, the 1.0850 line, serves as the next line of resistance, after working as such back in 2009 as well.

Above, the next significant line is rather far – 1.1130, which capped the pair back in 2009. It’s quite far now.

Looking down, 1.04 is a veteran line of support and resistance, and currently works as support. Below, the 1.0280 proved to be rather strong in recent months, and is the next line of support.

Lower, the 2009 low 1t 1.02 serves as the next line of support. Lower, 1.01 capped the pair after it reached parity in April, and also was a low point a few weeks ago.

The ultimate line of support is parity – which seems far now.

I turn neutral on USD/CAD.

The Canadian economy cannot keep pushing forward as its main trade partner is still behind. Recent retail sales showed it. While the situation is still OK in Canada, more range trading seems likely at the moment.

USD/CAD Weekly Technical Forecast (Aug 2-6 2010)

The loonie will move on US data during most of the week, but the busy end of the week promises tension. Here’s an outlook for the Canadian events, and an updated technical analysis for USD/CAD.

USD/CAD daily chart with support and resistance lines on it. Click to enlarge:



Canada’s monthly GDP rose by 0.1%, exactly as expected, and kept USD/CAD rather stable. Will we see another jump in employment?

1. Building Permits: Published on Thursday at 12:30 GMT. This important housing figure is very volatile. It fell by double digits last month (10.8%), but it’s important to remember that it made a similar leap three months ago (12.2%). It’s now expected to rise by a very modest 0.6% – expect surprises. This always shakes the loonie.


2. Employment data: Published on Friday at 11:00 GMT. After a huge leap of 93,200 jobs last month, a very modest rise of 10,300 jobs is expected this time, in the employment change figure. The unemployment rate, which unexpectedly dropped to 7.9% is expected to stay unchanged this time. The timing, 90 minutes before the American Non-Farm Payrolls, always promises action on USD/CAD, even if the Canadian figures will indeed be tame as expected.


3. Ivey PMI: Published on Friday at 14:00 GMT. The week isn’t over for the loonie. The Richard Ivey Business School has a major PMI number to end the week. From a good score of 58.9 points, the score is predicted to edge down to 56.3 – still above 50, meaning economic expansion.

USD/CAD Technical Analysis

This week’s trading was dominated by a tight range – 1.0280 to 1.04. Two false breakouts were seen to the downside – USD/CAD went as low as 1.0256 but quickly returned to the range, and closed at 1.0291.

Most lines haven’t changed since last week’s outlook. The same range continues into the next week. 1.04 was the long term bottom border of the 1.04 to 1.0750 range, and now works as a tough resistance line. Above, 1.0550 capped the pair several times in the past, and is a minor line of resistance.

The next line of resistance is at 1.0680, which capped the pair in June and several times in July. Apart from being the long term top border of the range, 1.0750 was also tested in May. Even higher, 1.0850 was a swing high in 2009 and a swing high in May as well.

Looking down below 1.0280, the 2009 low of 1.02 is the next line of support. Note that it also worked as resistance after the pair hit parity in April. Lower, 1.01 is a minor line of resistance, and it’s followed by the ultimate support line – parity.

I remain bearish on USD/CAD.

The improving Canadian economy, rising interest rate and fresh jobs data should boost the loonie. Also note that a breakout of oil prices above $80 per barrel will fuel the Canadian dollar.