It was another quiet week for the Canadian dollar, which posted small gains. USD/CAD closed the week just below the 1.33 level. This week’s key event is Employment Change. Here is an outlook on the major market- movers and an updated technical analysis for USD/CAD.
US consumer confidence sparkled in March, as consumers remain confident about the economy. Canadian GDP posted a strong gain of 0.6%, above the forecast of 0.3%.
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USD/CAD daily graph with support and resistance lines on it.
- RBC Manufacturing PMI: Monday, 13:30. The PMI has improved over five straight months and continues to point to expansion. In January, the index rose to 54.7 points.
- BoC Business Outlook Survey: Monday, 14:30. The survey is released quarterly and is based on 100 businesses, which rate business conditions, hiring and spending. A positive report could send the Canadian dollar higher.
- Trade Balance: Tuesday, 12:30. Canada’s trade surplus dipped to C$0.8 billion in January, well above the forecast of C$0.2 billion. The downward trend is expected to continue in February, with an estimate of C$0.7 billion.
- Building Permits: Thursday, 12:30. The indicator posted a strong gain of 5.4%, above the estimate of 3.1%. This follows a streak of two straight declines.
- Employment Change: Friday, 12:30. This is one of the most important indicators and an unexpected reading can have a strong impact on the direction of USD/CAD. The indicator softened to 15.3 thousand in February, crushing the estimate of 0.6 thousand. The downward trend is expected to continue in March, with a forecast of 5.7 thousand. The unemployment rate is expected to edge up to 6.7%.
- Ivey PMI: Friday, 12:30. In February, the indicator slipped to 55.0 in February, short of the forecast of 58.9 points. The index is expected to improve to 56.3 in the March report.
USD/CAD Technical Analysis
USD/CAD opened the week at 1.3330 and climbed to a high of 1.3414, as support held at 1.3457. The pair then reversed directions and dropped to 1.3276. USD/CAD closed the week at 1.3297.
Technical lines, from top to bottom
- 1.3648 was an important support level in February.
- 1.3551 is the next line of resistance.
- 1.3457 was a high point in September 2015.
- 1.3351 is the next line of resistance.
- 1.3212 is providing support. It was a cap in the second quarter of 2016.
- 1.3124 is the next support level.
- 1.3003 is protecting the symbolic 1.30 level.
- 1.2908 is the final support level for now.
I am bullish on USD/CAD
The US economy continues to fire on all cylinders and the Fed is expected to continue to raise interest rates, so sentiment remains favorable for the US dollar. In Canada, BoC Governor Stephen Poloz strongly hinted that no rate hikes are likely in the near future.
