USD/CAD forecast: Bears take on fresh 2019 low, target full breakout below 38.2% Fibo


  • USD/CAD continues to extend losses below 200-W EMA following Fed's Powell. 
  • Fed vs BoC remains the driving force behind USD/CAD's downside.

This was the week: 

USD/CAD continues to the downside following the Federal Reserve's move to an easing bias and a rate cut that was rubber-stamped in Federal Reserve Chairman's two-day testimony to Congress during the week. 

Meanwhile, the Bank of Canada remains in neutral and data dependent.  A strong month for industry-level GDP sealed the deal for the Canadian dollar at the end of last month as the data provided evidence that the headwinds weighing on the Canadian economy through Q4/Q1 were indeed transitory. Then the jobs data underscored a bullish backdrop for the economy. The CPI data next week will likely leave the BoC sidelined though which remained something of an outlier this week, maintaining a neutral bias in its policy statement on Wednesday.  For the week ahead, both Canadian CPI/Retail Sales/Manufacturing/Housing data and U.S. Retail Sales are on tap along with more Fed' speakers. 

Key CAD events:

The Candian Consumer Price Index, (CPI/inflation data) is likely to keep the BoC on the sidelines, for now. Indeed, the BoC put greater emphasis on trade tensions and slowing global growth, raising the odds that its next move will be to lower rates - it also has a bit of leeway to hold rates steady while the Fed eases. Meanwhile, the data flow will pick up with the release of several major indicators next week with CPI the most important.

" CPI will get most of the attention with TD looking for a pullback to 2.1% on lower energy prices, while weaker auto sales will weigh on retail sales growth in May. However, industry-level GDP will be supported by a rebound in manufacturing activity which should keep Q2 tracking near 3%,"

analysts at TD Securities explained. 

Next weeks economic is unlikely to build a case for the BoC to follow its global counterparts in the near-term.

GMT
Event
Vol.
Actual
Consensus
Previous
Thursday, Jul 11
12:30
0.0%
 
0.1%
12:30
-0.1%
0.1%
0.0%
Tuesday, Jul 16
12:30
 
 
$-0.19B
12:30
 
 
$-12.8B
Wednesday, Jul 17
12:30
 
 
-0.6%
12:30
 
2.6%
2.1%
12:30
 
0.1%
0.4%
12:30
 
2.1%
2.4%
12:30
 
 
0.3%
12:30
 
0.2%
0.4%
Thursday, Jul 18
12:30
 
 
-16K
Friday, Jul 19
12:30
 
 
0.1%
12:30
 
0.3%
0.1%

Key U.S. events:

Comments from US Fed Chair Powell this week reinforced expectations for a rate cut at the end of July, and we think a follow-up move is likely in September. “Muted” inflation trends give the Fed flexibility to provide a bit more accommodation to offset global growth concerns and a softening US industrial sector (both linked to rising trade tensions). 

Retail Sales are coming up next week along with a series of Fed speakers again, with Retail Sales the most key considering data is more in focus than repeats of the Fed speakers mantra. 

"We expect another increase in sales in the key control group to be the main driver behind a 0.1% headline gain, as consumer fundamentals remain sound. A firm increase in core sales should more than offset both a decline in sales at gasoline stations, which reflects a drop in gasoline prices in June, and a minor retreat in auto sales following a 0.6% increase in May,"

analysts at TD Securities explained. 

GMT
Event
Vol.
Actual
Consensus
Previous
Thursday, Jul 11
21:00
 
 
Friday, Jul 12
12:30
0.3%
0.2%
0.2%
12:30
2.3%
2.2%
2.3%
12:30
1.7%
1.6%
1.8%
12:30
0.1%
0.0%
0.1%
14:00
 
 
17:00
784
 
788
19:30
$17.2K
 
$53.1K
19:30
390.1K
 
392.8K
19:30
$244.8K
 
$258.9K
Monday, Jul 15
12:30
 
0.5
-8.6
15:30
 
 
2.21%
15:30
 
 
2.075%
Tuesday, Jul 16
12:15
 
 
12:30
 
0.3%
0.5%
12:30
 
0.4%
0.4% Revised from 0.5%
12:30
 
0.3%
0.5%
12:30
 
-1.4%
-0.7%
12:30
 
-0.5%
-0.3%
12:30
 
-2.3%
-1.5%
12:30
 
-0.4%
-0.2%
12:55
 
 
-2.2%
12:55
 
 
6.2%
13:15
 
78.1%
78.1%
13:15
 
0.2%
0.4%
14:00
 
0.4%
0.5%
14:00
 
65
64
15:30
 
 
1.985%
17:00
 
 
19:30
 
 
20:00
 
 
$-7.8B
20:00
 
 
$46.9B
20:30
 
 
-8.129M
Wednesday, Jul 17
11:00
 
 
-2.4%
12:30
 
1.9%
-0.9%
12:30
 
 
0.7% Revised from 0.3%
12:30
 
1.265M
1.269M
12:30
 
1.300M
1.299M Revised from 1.294M
14:30
 
-5.642M
-9.499M
18:00
 
 
Thursday, Jul 18
12:30
 
 
1.723M
12:30
 
216K
209K
12:30
 
 
219.25K
12:30
 
5.0
0.3
14:30
 
 
81B
Friday, Jul 19
14:00
 
98.0
98.2
15:05
 
 
17:00
 
 
784
19:30
 
 
$17.2K
19:30
 
 
$244.8K
19:30
 
 
390.1K
20:30
 
 

USD/CAD Technical Analysis

The price is on course for breaking away from below the 38.2% Fibo of the Sep 2017 to date range down at 1.3045. 1.3018 is a fresh low for 2019. 'Funds', (USD/CAD), has surpassed the 200-week moving average while weekly and daily stochastics remain in oversold territory. Prospects to the upside are limited by channel resistance while downside continuation opens 1.2970.

USD/CAD Forecast Poll

The FXStreet forex poll of experts is a sentiment tool that highlights near- and medium-term price expectations from leading market experts and shows a bearish bias near term turning bullish over time.

1 Week
Avg Forecast 1.2997
0.0%100.0%11.0%0-100102030405060708090100110
  • 11% Bullish
  • 89% Bearish
  • 0% Sideways
Bias Bearish
1 Month
Avg Forecast 1.3116
100.0%91.0%56.0%0556065707580859095100
  • 56% Bullish
  • 35% Bearish
  • 9% Sideways
Bias Bullish
1 Quarter
Avg Forecast 1.3198
100.0%90.0%67.0%065707580859095100
  • 67% Bullish
  • 23% Bearish
  • 10% Sideways
Bias Bullish

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD extends gains to fresh seven-week highs

The American dollar is under selling pressure amid a better market mood. EUR/USD above 1.1140 ahead of several Fed’s speakers that can rock markets.

EUR/USD News

GBP/USD trades around 1.29 amid speculation of Brexit vote

GBP/USD is trading around 1.29 as speculation mounts about the fate of the Brexit deal. UK PM Johnson faces a test in parliament after securing an accord with the EU.

GBP/USD News

USD/JPY: struggles near mid-108.00s pivotal point amid weaker USD

US Dollar Index slumped to multi-month lows below 97.50. 10-year US Treasury bond yield adds more than 1% on Friday. Wall Street's main indexes look to start the day little changed.

USD/JPY News

China’s downward economic path offers no escape from its trade problems

There were no surprises in China’s GDP figures as the government portrays an economy slipping steadily lower giving little promise of improvement or support for the waning global expansion.

Read more

Gold turns flat above $1,490 as USD remains under pressure

After dropping to a daily low of $1,485, the XAU/USD pair staged a modest rebound during the American trading hours and turned flat on the day near $1,492.

Gold News

Forex Majors

Cryptocurrencies

Signatures