The Canadian dollar had a huge rebound last week, as USD/CAD plunged some 460 points. The pair closed at 1.4117. This week’s highlight is GDP. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.
In the US, inflation numbers were within expectations, but Unemployment Claims surged to their highest level in 11 months. The Canadian dollar improved after the BOC surprised the markets by not cutting interest rates, and strong retail sales also bolstered the currency. However, inflation numbers remained weak, as Core CPI posted a second straight decline.
Updates:
USD/CAD daily graph with support and resistance lines on it.
- GDP: Friday, 8:30. GDP is one of the most important economic indicators, and an unexpected reading can have a sharp impact on the movement of USD/CAD. In October, GDP posted a flat gain of 0.0%, shy of the forecast of 0.2%. Will the indicator push into positive territory in November?
- RMPI: Friday, 8:30. RMPI measures inflation in the manufacturing sector. The index slipped 4.0% in November, weaker than the estimate of -2.3%.
USD/CAD Technical Analysis
USD/CAD opened the week at 1.4579 and climbed to a high of 1.4690. The pair reversed directions and dropped to a low of 1.4103, breaking below support at 1.4159. USD/CAD closed the week at 1.4117.
Technical lines, from top to bottom
With USD/CAD posting sharp losses last week, we start at lower levels:
1.4480 was an important cushion in April 2000.
1.4310 is the next line of resistance.
1.4159 has switched to a resistance role following sharp losses by the pair.
1.4019 is providing support, just above the psychologically important 1.40 level.
The round number of 1.39 is next.
1.3757 is the final support level for now.
I am neutral on USD/CAD
After huge losses in recent weeks, the Canadian dollar reversed directions. Speculation about a March rate hike in the US has dampened following weak inflation and employment numbers. Still, the US economy continues to outperform the Canadian economy, and investors have not shown much appetite in 2016 for minor currencies like the Canadian dollar.
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