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.
-------
Who were the best experts in 2015? Have your say and vote for FXStreet's Forex Best Awards 2016! Cast your vote now!
-------
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD nears 1.0800 on broad US Dollar weakness
Optimism continues to undermine demand for the American currency ahead of the weekly close. EUR/USD hovers around weekly highs just ahead of the 1.0900 figure.
GBP/USD reconquers 1.2500 with upbeat UK GDP
Following BOE-inspired slump on Thursday, the British Pound changed course and trades around 1.2530. Better-than-anticipated UK GDP and a weaker USD behind the advance.
Gold resumes advance and trades above $2,370
XAU/USD accelerated its recovery on Friday, as investors drop the USD. Dismal US employment-related figures revived hopes for a soon-to-come rate cut from the Fed.
XRP tests support at $0.50 as Ripple joins alliance to work on blockchain recovery
XRP trades around $0.5174 early on Friday, wiping out gains from earlier in the week, as Ripple announced it has joined an alliance to support digital asset recovery alongside Hedera and the Algorand Foundation.
Week ahead – US inflation numbers to shake Fed rate cut bets
Fed rate-cut speculators rest hopes on US inflation data. After dovish BoE, pound traders turn to UK job numbers. Will a strong labor market convince the RBA to hike? More Chinese data on tap amid signs of slow Q2 start.