USD/CAD Forecast: Price respecting 38.2% & 61.8% Fibo range, eyes on U.S. retail sales and price of oil

• USD/CAD ends the week on a sour note but is respecting familiar ranges.
• U.S. Retail sales in focus with eyes on global growth prospects.

This was the week: FOMC and US CPI was in focus, but global growth fears weighed in

The attention was on the FOMC minutes, US CPI and some second-tier domestic data for the Loonie, although the price of oil and global growth concerns were a key driver. However, the market is fickle, and there have been no dominant themes hanging around long enough to underpin direction one way or the other for the Loonie, leaving the cross sideways. Both the IMF and IEA forecasted risks to global growth which could play out in favour of the bears in oil and the price of the CAD. The minutes were interpreted as being neutral to slightly hawkish, relative to expectations and US CPI was a shade weaker than expected. The pair has been moving sideways between the 31.2% Fibo and 61.8% Fibo with rallies faded and dips bought.  However, fundamentally, the convictions at the Bank of Canada remain the same where the BoC was to remove wording at its last meeting around the need for rates to rise to the neutral range over time. The outlook for medium-term USD/CAD has not changed, and the pair is likely to trade between a range of 1.3100/1.4000 for the year - (Although the balance of risks implies that the pair will spend the majority of its time this year in a narrower 1.31-1.38 range).

Key CAD data events:

Housing starts and building permits were a negative on Monday with New housing price index slightly higher. To end the week, BoC's Lane: Lower Canadian dollar will help support the Canadian economy

Canadian events: Eyes on Bank of Canada Business Outlook Survey

On 15 April, the Bank of Canada Business Outlook Survey is in focus. "Strong March auto sales and a firm rebound in the control group should underpin a solid 1.3% m/m jump in retail sales, following a 0.2% decline in February. We expect the improvement in sales in the key control group to be supported by a normalization in tax refunds, rising real disposable income and a still humming labor market," analysts at TD Securities explained. Then, on 17 April,  CPI (Mar) will be in focus.  The headline (m/m) is expected at 0.7% and (y/y) at 1.9% where a sharp rebound in gasoline prices will be expected to firm up inflation for the month. 

US events: Eyes on retail sales

On the 18th April, we have  Retail Sales (Mar).  The headline (m/m) is expected at 0.9% while the Control Group (m/m) is expected at 0.4%. Analysts at TD Securities explained that the strong March auto sales and a firm rebound in the control group should underpin a solid 1.3% m/m jump in retail sales, following a 0.2% decline in February. "We expect the improvement in sales in the key control group to be supported by a normalization in tax refunds, rising real disposable income and a still humming labor market."

USD/CAD Technical Analysis

There is no bias in the pair until either the 38.2% or the 61.8% Fibo give out, taking the rai beyond the extremes of recent price action. A break of the resistance and confluence of the 61.8% Fibo comes just shy of the early March 1.3450/60 swing high territory; Bulls will then look to the 78.6% Fibo in the 1.3530s. However, should the bears step in, which could come as a result of a sustained rally in the price of oil the risk is for a break below the 38.2% Fibo that will bring in the 23.6% Fibo and trendline support (and 200-D SMA) where a break out opens risk back to 1.3070 support and 1.2780 below there.

USD/CAD Sentiment

The FXStreet forex poll of experts is a sentiment tool that highlights near- and medium-term price expectations from leading market experts and it shows a bearish outlook on a forward basis, bullish near term.